document

Northwest Regional Economic Strategy 2006

BASELINE UPDATE REPORT 2007 : Progress One Year On

June 2007

RES report final:Layout 1 22/6/07 12:08 Page 2

BASELINE UPDATE REPORT 2007


After the first year of the implementation of RES 2006, this report looks at the progress which hasbeen made. It follows the same format as the Baseline Report giving updates on the agreed range ofindicators/impact measures for each RES factor and progress with milestones for each RES action. Ithas been compiled by accessing relevant data sources and by each lead organisation providinginformation on action implementation.

It must be remembered that many of the impact data / indicators relate to the period before 2006,when RES implementation started. If an indicator is moving in the wrong direction, or not improvingas much as desired, it does not therefore imply that RES action is being ineffective. It could be thatthe action is entirely appropriate and effective, but that this is not yet showing through in the impactdata due to time lags. We must also be careful in drawing too many conclusions from one year’sdata changes, particularly given the confidence intervals around many of the datasets.

One notable feature during the year has been the revision of many economic datasets for previousyears, particularly GVA. The Office of National Statistics (ONS) now believes that the Northwesteconomy did not perform as well as was originally thought in the early part of the century. Ratherthan outperforming England, the region’s performance was equal to, or slightly worse than, England.This has implications for our expectation of performance in the period 2006-9.

Despite good economic performance, the delivery of major infrastructure improvements and anincreasing feeling of prosperity in much of the Northwest (particularly our major cities) it must beremembered that economic performance of this kind has been experienced elsewhere in the countryfor some time. Closing gaps with the rest of the country will therefore be a tough job and the regionmust not become complacent about the implementation of RES action or effects they will have in thatregard. As the rest of the country progresses economically, the region needs to as well, just to standstill.

The overall conclusion from the analysis is that although many of the RES actions are beingimplemented effectively and the region is making progress in a number of important areas, the rateof progress is not as fast as planned or enough in order to close vital gaps with England, or meetRES targets. RES lead partners did not mention many barriers to implementing RES actions in theirreturns this year and although this should give us confidence that RES actions will be delivered, weneed to ensure that this does not turn into regional complacency about economic performance andthat the actions will indeed deliver the level of change we need to see in the region to competeeconomically.

Given the data revisions (and the fact that all of this data is for the period prior to the RES) theregion needs to debate what more needs to be done to prioritise investment to ensure these keyeconomic indicators move in the right direction. The analysis would suggest that we need to focuseven more effort on a number of key areas:

• Using the skills of the whole workforce more effectively – via an increased focus on Innovation, Leadership and Management, the “Skills Escalator”, tackling worklessness/ lack of basic skills, improving health, and delivering the Regional Equality and Diversity strategy

• Building on the major opportunities which exist in important parts of the region – such as the Arcof Opportunity in Manchester, Omega in Warrington, Energy and Environmental Technologies in Cumbria – creating the conditions and high quality environment where the private sector wants to invest

Introduction



• Carefully considering the longer term implications of population change, an ageing workforce and migration, and better understanding of the impact of housing on economic development

• Tackling potential infrastructure blockages to growth – such as a comprehensive plan to tackle congestion in parts of the region and alter commuting behaviour, and tackling concerns about the lack of power to key employment locations

• Creating opportunities from key global and national trends – including climate change, concerns about the security of energy supply, the experience economy, changing employment patterns, and concerns about health, crime and cultural issues

Much progress has been made, but more remains to be done in ensuring that we can show realimpact from RES actions, rather than a focus on process, and spotting opportunities to link RESactions up with each other to be mutually re-inforcing and achieve maximum impact. We trust thisreport will stimulate these further actions in the region.

RES Advisory GroupMay 2007




Progress against the 8 targets in the RES has been mixed, as the table below shows:

8 Headline Targets

Target 2006-2009 Measure 2006 Baseline 2007 Update

GVA: £102bn £106bnGVA growth: 5.7% 3.7%GVA gap: £17.3bn £17.8bn

Achieve GVA growth above Englandaverage (to close GVA/head gap withEngland in the longer term)

No. jobs 3.04m 2.98mNo. “knowledge” jobs 1.14m 1.19m% “knowledge” jobs 36.9% 38.5%

Create 150,000 new jobs, 80,000 in“knowledge occupations” to have same% in these occupations as England

GVA Growth (latest data 2005):

Job Creation (latest data 2005):

Firm Formation rate (no.): 17640 17500Firm Formation rate per 10,000 35 32people

No. fewer businesses than the 38000 37000England average

Raise the firm formation rate to 21,000per annum (to have same rate andbusiness stock as England in the longerterm)

Firm Formation (latest data 2005):

Working age popn with no quals: 724600 697000% of working age popn. with 17.7% 17.0%no quals:Districts with rate more than 29% 2 0

Reduce the working age populationwith no qualifications by 80,000 andno district with more than 29%. (In thelonger term to have the same % asEngland)

No Qualifications (latest data 2005):

Workforce: 2.98m 2.98mEmployment rate: 72.7% 72.6%Districts with rate less than 68%: 4 4

Increase the workforce by 83,000 (tomeet the England employment rate)and no district to have an employmentrate less than 68%. (In the longer termto achieve an 80% employment rate)

Employment Rate (latest data 2006):

No. of areas in worst 5%: 579 No Update

% of people in households with 12% No Update income less than 60% of GB median

Reduce the number of areas in theworst 5% nationally. (In the longer termless than 20% of people with ahousehold income less than 60% ofthe GB median)

Deprivation (latest data 2004):

CO2 emissions per unit of GVA Robust data not yet availableCO2 emissions Robust data not yet available

Reduce CO2 emissions per unit ofGVA. (In the longer term to meet Kyototargets of emissions 12.5% lower than1990 levels)

CO2 Emissions

Workforce with graduate quals: 840800 891700% of graduate quals: 26.9% 28.4%

Increase the workforce with graduatequalifications by 120,000 to meet theEngland average

Graduate Qualifications (latest data 2005):

Note: Those items marked in green are moving in the right direction and are on track to meet the target.Those items in amber are moving in the right direction, but not quickly enough to meet the target. Thoseitems in red are moving in the wrong direction.



GVA:

The GVA of the Northwest has increased by £3.7bn from 2004 to 2005 (3.7%). However GVAgrowth has been below the England average of 3.9%. This means that the GVA gap has increasedfrom £17.3bn to £17.8bn. (The RES identified the GVA gap as £13bn, however subsequent datarevisions changed this figure to £16.2bn).

This £17.8bn gap is accounted for by:

• £3.5bn due to fewer people of working age and fewer people working than the England average (compared to £3bn in RES 2006)

• £14.3bn due to lower productivity of those people in work (compared to £10bn in RES 2006). This is partly a reflection of differences in regional prices and the nature of the jobs in the region

The Northwest economy has also grown slower than the England economy excluding London and theSouth East. The latter grew at 3.9% with the result that the GVA gap has grown from £4.8bn at thetime the RES was written to £5.2bn.

Sub regionally the contribution to this gap is shown in the bar chart below (together with changesfrom RES 2006).

Job Creation:

From 2004 to 2005 the number of jobs in the Northwest declined by 55,600. However the numberof knowledge jobs increased by 42,200 so that knowledge occupations now represent 38.5% of alljobs. This is an increase of 1.6% points compared to 1% in England. Although this data is before thestart of the RES, this increase relative to England is not fast enough for the Northwest to meet theEngland average % by 2009. The total number of jobs is also not growing as fast as needed toachieve the target.

This data fits with the GVA data which suggests that relative economic conditions for the Northwestbecame harder between 2004 and 2005, making achievement of the RES targets in 2006-9 evenmore challenging.

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

-2,000

-4,000RES

2006

Cumbria

Update RES2006

Cheshire

Update RES2006

GreaterManchester

Update RES2006

Lancashire

Update RES2006

Merseyside

Update RES2006

Northwest

Update

ProductivityEmployment

GVA

£m

s




Firm Formation:

The region has reduced the gap in the number of businesses with the England average from 38,000to 37,000 although the firm formations (both number and rate) have reduced. The reduction in firmformation is against the national trend so the Northwest firm formation rate is now 83.5% of theEngland rate (compared to 85.5% last year).

No Qualifications:

The region has done well in relation to this target in the last year for which we have data (2005). Thenumber of people in the workforce without qualifications reduced by 27,600. If that rate of reductionis maintained this RES target will be met. There is now no district with more than 29% of theworkforce without qualifications. However there has also been a substantial reduction in the % of theworkforce without qualifications in England (from 14.8% to 14.1%), and therefore the Northwest hasnot closed the gap with England at all during the year.

Graduate Qualifications:

This shows a similar pattern to the “no qualifications” target – the number of graduates in theworkforce increased by 50,900 which is at a rate fast enough to meet the RES target if maintained.However the % of graduates in the workforce increased rapidly in England (from 28.3% to 29.9%),meaning that the Northwest gap with England actually widened slightly during the year, although thedata is slightly volatile from year to year.

Employment Rate:

The Northwest workforce has increased by 2,900 from 2005 – 2006. This is the only headline targetfor which we now have 2006 data. This rate of increase is not enough to meet the RES target of anadditional 83,000 people in the workforce. The employment rate has also declined, although onlyby 0.1% points compared to 0.3% points in England as a whole. This still leaves the Northwestemployment rate 1.8% points behind the England rate and unlikely to converge by 2009 as originallytargeted. In addition, there has been no reduction in the number of districts with an employment rateof less than 68% and the target is to eliminate these by 2009. However the actual districts with a rateless than 68% have changed (Manchester, Liverpool and Knowsley remain, Preston has dropped outand Blackburn has come in).

It is worth noting that although there is mixed news on employment rates, its contribution to the GVAgap of the region has now reduced from accounting for 23% of the gap at the time of the RES to20% (in 2005).

Deprivation:

Data on the number of areas in the worst 5% and households with less income than 60% of the GBmedian has not been updated during the year.

CO2 Emissions: Data on CO2 emissions is still being compiled and will be a key element of theimplementation of the regional Climate Change Action Plan.



The section below looks at each of the 25 RES factors and provides a commentary on progress in theyear, the latest data and any barriers/further action suggested either by lead organisations or by theanalysis and consultation carried out by the RES Advisory Group. Each section is colour coded toenable the reader to get a quick overview of progress – green being good, yellow being mixed andred being poor progress.

BusinessENTERPRISE

Progress: Good progress has been made with Business Link NW being fully operational from 1 April07, focusing on priority sectors (although there are a number of important vacancies in the newcompany still to be filled). A new Business Start contract will be operational in May and the NWEnterprise Forum will hold its first meeting in the summer. A regional enterprise policy is currentlybeing developed and research is underway into the support needs of M businesses (medium sizedbusinesses) and social enterprises.

Data: The region has underperformed for many years on enterprise and turning around performancein this area will take a long time. The latest data provides mixed evidence about whether we arebeginning to close this gap. There has been an increase in self employment rates in 2006, butbusiness start up rates and 12 month survival rates have declined (2005 data).

Implications & further action/ barriers: There is a need for more people to champion thisagenda, and to recognise the potential of HE enterprise activities in particular. There is also a needto support the Business Support Simplification agenda to achieve a more co-ordinated and easilyaccessible service to individuals considering starting a business. The new ERDF NW OperationalProgramme 2007-13 (in which enterprise is a priority) provides an opportunity to align supportservices.

REGIONAL SECTORS

Progress: Good progress has been made with the confirmation of the BBC move to Salford andassociated developments in the Digital and Creative Industries. A forward strategy for thedevelopment of the Financial and Professional services has been agreed. Food Northwest (the newbody to implement the Food and Drink Strategy) became operational on 1 April. Vauxhall’s recentdecision on the new Astra in Ellesmere Port is also a positive sign. However there is less clearprogress in implementing strategies around the large and widespread employment sectors.

Data: Although the proportion of employment in knowledge occupations has increased, the gap withEngland in the number of people working in knowledge sectors has increased and the percentage ofGVA accounted for by the priority sectors has fallen substantially. On the positive side, the GVA gapaccounted for by Business services has also fallen.

Implications & further action/ barriers: It will be important to focus effort on the 6 priority sectorsand ensure growth in these knowledge sectors if the region is going to compete. The new BusinessLink service is important in this regard and needs to build on the specialist knowledge within clusterorganisations and also to connect with work in the sub regions




INNOVATION

Progress: Progress has been made in terms of implementing the Knowledge to Innovate contract, HE– Business Engagement Programme and piloting innovation work in two non science disciplines.However progress on a regional policy paper on Innovation, expanding the HE Business Engagementprogramme and HEI capacity for business interaction has been limited.

Data: Only one data set has been updated during the period, showing an increase in the number ofpatent applications granted.

Implications & further action/ barriers: The RES was specific about Innovation being a key way toraise productivity by companies working smarter, particularly in widely traded business services andthe need to implement progressive HR practices to promote an innovative culture and capture theskills/ideas of the whole workforce. A number of new services are planned to address this issuefurther and innovation is now a key focus of Northern Way. Although there were no specific issuesraised by leads the region must question whether there is a sufficient focus on tackling this issuewhich is fundamental to regional productivity.

SCIENCE/R&D

Progress: The announcement of Daresbury as one of two major science centres in the country, thelaunch of the Daresbury Science and Innovation Centre, the updating of the Northwest ScienceStrategy and the establishment of the N8 Research Centres through Northern Way all representsignificant progress in this factor. The two disappointments through the year were the unsuccessfulNHS Research Centre bid in Manchester and HECTOR Supercomputer Bid at Daresbury.

Data: None of the datasets for this factor have been updated.

Implications & further action/ barriers: There were no specific issues raised by the leads on theimplementation of this factor.

INTERNATIONAL COMPETITIVENESS

Progress: The production of the Internationalisation Strategy represents a major step forward for theregion in focusing on this factor.

Data: Although the data is for 2006 and before the Internationalisation Strategy has beencompleted, the number of exporters in the region has fallen although the value of exports from theregion has increased substantially. Other significant data has not been updated during the year. Itshould be noted that inward investment is still hugely important to the region, accounting for 16% ofGVA and 1 in 9 jobs. Inward investors pay 29% more and are 34% more productive than indigenousfirms.

Implications & further action/ barriers: It will be essential to ensure that the InternationalisationStrategy is fully implemented if the region is to compete effectively in the global economy. This meansensuring sufficient resources are dedicated to delivering the action plan. There is a potential risk fromthe Comprehensive Spending Review in reducing resources and regional decision making regardinginternationalisation. Overseas presences are very significant in capturing mobile inward investmentprojects with 60% coming from countries where we have an overseas presence and less than 10% ofFDI enquiries coming from UKTI.



ICT

Progress: Mixed progress has been made during the year. A number of Intelligent Business Eventshave been held and a “Closing the ICT Knowledge Gap” project set up, although progress has beenslower than planned. There is a significant Homeworking project in the region (supported by BT)although the impact on the number of homeworkers is likely to be small. The ICT infrastructure andits speed continues to expand.

Data: There has been no data updates for the majority of the impact measures in this factor. 2 Mbbroadband availability has however exceeded its 2009 target.

Implications & further action/ barriers: ICT underpins all the 3 drivers in the RES and as suchneeds to be embedded into the delivery of other RES factors such as regional sectors,internationalisation, job linkages and community. It must not be seen as a separate entity.

SUSTAINABLE CONSUMPTION AND PRODUCTION

Progress: The regional Climate Change Action Plan has been produced and will be implemented inthe coming years. This is a significant step forward for the region on this agenda. The BREW projecthas been successfully working with businesses on sustainable consumption and production and thesmall regional programme on Corporate Social Responsibility has continued well.

Data: There have been no data updates for the impact measures in this factor.

Implications & further action/ barriers: Climate Change is now a major national issue and onewhich businesses are increasing taking action on, showing their “green” credentials. There areopportunities for this region to be at the forefront of this agenda, particularly linked to our significantpriority sector of energy and environmental technologies. The region needs to ensure that concernsaround this agenda are turned into business opportunities and a real focus on sustainableconsumption and production by all businesses – whether to benefit their own business processes orto capture a wider share of, or new, markets.




Skills and EducationBASIC SKILLS

Progress: Good progress has been made with targets for the delivery of Skills for Life being exceeded andnew LSC/Jobcentre Plus employability programmes being launched.

Data: The latest data available is for 2006, but shows a small increase in the number of people with noqualifications over and above the England average. However there are now no districts with more than29% of the population without qualifications.

Implications & further action/ barriers: Delivery on basic skills is now being taken forward under the NorthWest Skills for Life Strategy with specific actions to increase numeracy and adult participation in Skills for LifeProgrammes. The data would suggest that we are making progress in the most deprived parts of the region intackling the lack of basic skills, although the progress across the region is not as fast as in England. There willtherefore be a major challenge if the region is to achieve the targets set out within the Leitch Review which are3 times current targets, and ESOL provision could overwhelm existing budgets in future.

SECTOR SKILLS AND WORKFORCE DEVELOPMENT

Progress: There has been good progress in delivering the skills required by the priority sectors, workingthrough the Sector Skills Councils and the Regional Skills Partnership’s Statement of Skills Priorities. TheHigher Level Skills Pathfinder project has also been introduced. There has been some work at a subregional level to plan for the skills required for specific growth opportunities such as Omega, Kingsway,Capital of Culture and more widely for the rural economy. Train to Gain has been successfully rolled out.Less significant progress has been made in delivering IT skills, language skills and business improvementtechniques to businesses. (The lack of progress on IT skills is in part due to a lack of expressed demand –this needs to be better understood.) There is also no specific provision focused on supporting workers tomove from declining to growth sectors or on tackling skills disparities amongst key groups. The “skillsescalator”, whereby intermediate and higher level skills are developed in a company’s current workforcecreating vacancies at lower levels to be filled by local workless people, is recognised as a concept but doesnot seem to be making much progress in reality.

Data: Many of the impact datasets for this factor have not been updated since the RES Baseline report wasproduced. However there have been large increases in the number and achievement of adult learnersstudying full Level 2 qualifications and full Level 3 qualifications, and a large increase in the number ofstudents engaged in Foundation degrees putting the region on track to meet its target.

Implications & further action/ barriers: If the region is to ensure sustainable growth in the major cities, itmust tackle the concentrations of worklessness in these cities and make use of that huge untappedpotential. It is not sustainable, economically or socially, to draw more and more people into the cities(usually commuting longer distances) whilst leaving a large number of people workless in these cities. Theconcept of the “skills escalator” must therefore become a reality. It addresses employers needs for higherskills levels, whilst giving appropriate opportunities to workless people. Stimulating employer demand forhigher levels skills is an important part of this equation and the higher level skills pathfinder is important inthis regard. Developing Level 4 skills is addressed within a wide range of RES actions but it may be usefulto have a more explicit focus on higher level skills, particularly within the context of Leitch. Based on futuremilestones there does not appear to be a comprehensive plan in each sub region to develop the skillsrequired focused on the key growth opportunities that are being pursued, a reflection of the fact that skillsissues are not central to sub regional plans. This has to be of some concern. There are also concerns overthe future funding for rural skills development and, based on Sector Skills Agreements, the appropriatenessof IT, Language and Business Improvement Techniques for businesses.



LEADERSHIP AND MANAGEMENT (L&M)

Progress: Good progress has been made in this area with the establishment of the NorthernLeadership Academy, a Northwest L&M Advisory Board (as part of the RSP), and a Northwest L&MAction Plan. In addition there has been delivery of coaching to high growth SMEs, a businessvolunteer mentoring programme and significant work in colleges around developing enterprise skills.

Data: A range of Management and Leadership indicators are still being established as part of theRegional Skills Partnership. There has been no change in the percentage of the workforce employedas managers/senior officials in the Northwest or England.

Implications & further action/ barriers: There were no major issues raised by the leads, except theneed to ensure the Northern Leadership Academy supports the implementation of regional prioritiesand initiatives. Leadership/ Management and “work organisation” skills were highlighted in the RESas crucial to companies ensuring the skills/ideas of the whole workforce are used effectively, closelylinked to innovation and therefore an essential part of tackling the productivity gap. The region willneed to ensure enough focus is given to this highly important factor. The RES raised the issue ofmaking leadership development a condition of taking up business support grants and this idea isworth exploring further. The focus of this factor is on leadership and management skills, with a loweremphasis now on corporate social responsibility, environmental management and enterprise skills.On the latter the challenge is to ensure enterprise becomes a core and sustained activity in collegesand students do indeed have every opportunity to become entrepreneurs.

EDUCATIONAL INFRASTRUCTURE

Progress: Good progress has been made in enhancing FE/HE provision in Burnley (East Lancashire)and in developing the University of Cumbria (albeit slightly behind target dates at this stage). A newpost 16 learning Kitemark has also been launched. There has been limited progress on new work toincrease the number of HE students studying science, engineering and technology, although there area range of existing schemes which need to be analysed to ensure any new schemes do not duplicate.

Data: There have been no data updates for many of the impact measures in the RES baseline report.However good progress has been made in terms of the number of full time equivalent HE students,although the percentage of HE students studying Science, Engineering and Technology has declinedslightly.

Implications & further action/ barriers: The Northwest economy must compete on the basis ofhigh added value. Graduate level skills are therefore crucial to the economy. It will be essential toensure that the University of Cumbria links into the needs of the Cumbrian economy, particularlyaround energy and environmental technologies. The University should act as a catalyst to stop youngpeople leaving the area and increasing levels of high added value employment.




People and JobsJOB LINKAGES

Progress: There has been good progress with most of the actions in this RES factor. Three CityEmployment Strategies are now up and running (Liverpool, Manchester and Blackburn) and workingwith DWP on freedoms and flexibilities needed to deliver on this agenda. Jobcentre Plus hascontinued to deliver significant programmes, including the Pathways to Work programme, withNorthern Way enhancements. There has also been a pilot outreach programme to partners of thoseclaiming benefits in ethnic minority groups, to improve employment rates. Two Job Developer postshave been launched in Manchester and Liverpool and a range of other activity carried out to developjob brokerage in the region. The Deprived Area fund was due to be launched during the year, butthis will now be launched in 2007/8. A new Northwest Equality and Diversity group has also beenset up during the year.

Data: The data gives mixed messages in relation to this RES factor. As noted in the headline targets,the employment rate in the region has declined (although not as fast as the England rate) butconvergance with the England employment rate by 2009 looks unlikely. (The gap with England interms of the number of people working has declined slightly but not nearly as fast as targeted.) 4districts still have employment rates of less than 68%. The percentages of the working age populationon incapacity benefit, JSA and income support have all increased relative to England. On thepositive side the employment rates of disabled people, non-white and the over 50’s have allincreased relative to England.

Implications & further action/ barriers: Job brokerage (linking employers and workless individualsin a customised way) is essential to delivery on this agenda. Good progress has been made in thisregard during the year, although more could still be done. A key issue for the future will be the abilityof the City Employment Strategy Partnerships to make a real difference to tackling worklessness onthe ground in a targeted and focused way. This is one of the most significant challenges facing theregion, particularly in the light of immigration. Other concerns include whether local authorities willhave sufficient resources to meet the childcare needs of all those seeking employment, and theproliferation of organisations seeking to address the Equality and Diversity agenda.

LOCAL EMPLOYMENT

Progress: There has been mixed progress in this factor. In terms of the 4 areas remote from growthin the RES, Blackpool suffered a major setback with its regeneration plans with the unfavourablecasino decision; a start has been made on the Integrated Economic Plan for East Lancashire;progress has been made in implementing the Barrow Masterplan with the acquisition of 35Ha ofland from Associated British Ports; and the West Cumbria Masterplan is nearing completion.

In terms of the growth areas good progress has been made in Liverpool with a number of majorschemes coming to fruition, including Kings Dock and Liverpool 1; considerable progress has beenmade in Manchester, not least with mediacity:uk and the Oxford Road corridor; and the Grosvenordevelopment in Preston has moved closer to reality. There have also been key developments aroundChester Culture Park, Omega in Warrington, Crewe Gateway, Lancaster Vision and the Carlisleeconomic strategy. Finally the Regional Rural delivery framework has been developed.

Many of the above developments include the encouragement of employment creation in/neardeprived areas and the new business start service, focused on such areas, will be an importantaddition in 2007/8.



LOCAL EMPLOYMENT (continued)

Data: There are limited data updates in relation to this factor. The median taxpayer income in theNorthwest has increased, but declined relative to England. The business density in rural areas andthe median taxpayer income in rural areas have both increased.

Implications & further action/ barriers: It is vital that the key places within the region fulfil theirpotential and this RES factor is a key to that. The region must continue to focus on the “Arc ofOpportunity” in Manchester (from mediacity:uk in Salford, through the city centre and cultureopportunities to the Oxford Road corridor and science opportunities). Delivery of key infrastructureimprovements and capitalising on the benefits of Capital of Culture will be essential to the continuedresurgence of Liverpool. The opportunities offered via Omega must be fully understood andexploited. A clear regeneration plan for Blackpool must be developed. Finally the opportunities tomake Cumbria a centre for the Energy and Environmental Technologies industries, via the WestCumbria Masterplan must be seized. The key barrier identified by lead organisations to delivering onthese agendas was a lack of funding. The region must prioritise funding for such developments,linked to creating the conditions where the private sector wants to invest, if it is to deliver economicsuccess.

A range of measures to deliver employment creation in deprived areas need to be progressed(including high quality sites/premises and inward investment), not least via the URCs. The emergingRegional Enterprise Strategy, which must engage appropriately with the economic priorities andbusiness needs of each sub region, will be important in this regard too. Finally there is some concernthat in mainstreaming the rural economy there is danger of a fragmented approach and duplicationof delivery.

HEALTH

Progress: There is limited progress to report in relation to this RES factor. Although the NorthwestHealthy Workplace Strategy has been published it is unclear how it will be implemented.

Data: Some of the data in this area has not been updated since the Baseline Report. However thepercentage of people in the Northwest who are obese has increased and the percentage who smokehas remained static. Other Northwest health statistics made depressing reading. The number ofincapacity benefit claimants has also increased and the percentage has not declined as fast as theEngland average.

Implications & further action/ barriers: The major concern raised by lead organisations was theneed to ensure that the Healthy Workplace Strategy is implemented. The current group does notappear to be working effectively to take these issues forward. Tackling ill-health in the region has tobe a major long term priority if the region is to compete economically and use the skills of the wholeworkforce.




POPULATION CHANGE

Progress: As with Health, there is limited progress to report in relation to this RES factor. MigrantWorkers Northwest has been launched and the 5050 Vision Business Plan implemented. Howeverthere has been no progress in promoting quality employment opportunities available in the region,and there are concerns about the demands for ESOL provision in the future.

Data: The data here shows a mixed pattern – with an increase in the number of NI registrations fornon-UK nationals and a minor increase in the employment rate of over 50s. It also shows anincrease in the retention of non Northwest students in the region after graduation and an increase inthe percentage of students returning to the region after qualification. However the percentage ofNorthwest students studying in the region and then leaving has increased.

Implications & further action/ barriers: The region needs to be clear how it will address the issuesof population change, including an ageing population and an increase in migrant workers. While thelatter has had a positive short term effect on the Northwest labour market, the region needs toseriously consider the wider long term effects of population change on the economy as a whole. Theregion needs to consider its response to the Lisbon Targets (% of people aged 55-64 remaining inemployment) where we are currently lagging behind the England and EU average. Leadorganisations have identified that wider support is needed to migrant workers beyond ESOLprovisions e.g. housing, benefits etc, although much of this could be provided via Migrant WorkersNorthwest. There is also concern about ESOL policy in relation to skills funding and the need to bespecific about employer/state and individual contributions.



Infrastructure

TRANSPORT

Progress: Good progress has been made in selection and implementation of priority schemes viathe Regional Funding Allocations (RFA) exercise. The Highways Agency has also made a number ofsignificant road/ junction improvements including the introduction of active traffic management at 10locations on the motorway network. Bids for the M60 Jn18-12 study and M6 widening preparatorywork are to be submitted to DfT this summer. Progress has been made with the Second MerseyCrossing and Edge Lane in Liverpool, although there are outstanding legal issues with the completionof the latter. Improvements to the Manchester Rail Hub are dependant on the North West RouteUtilisation Strategy which has been delayed until May and overall levels of congestion in the regionhave not been reduced. Airport Masterplans have been published and associated road schemesprioritised via RFA. The Port of Liverpool has been granted the Harbour Revision Order to enable it totake post panamax ships and the associated road/ rail improvements prioritised through theNorthern Way. Metrolink Phase 1 and 2 renewals will start in summer this year and the tenderingprocess is underway for Phase 3.

Data: Much of the data in this factor has not been updated however there have been increases inthe number of passengers at the 3 main airports and the numbers using Metrolink. New data onaverage vehicle delays on key routes makes interesting reading, with some increases in the averagedelays on the routes with shortest delay times and some decrease in average delays on the routeswith longest delay times.

Implications & further action/ barriers: Although there is much good progress on the ground, theconcern remains that there is no overall strategy for congestion reduction and the schemes arehaving little measurable impact on peak period traffic. The region has to consider influencingpatterns of behaviour, staggering working times and its investment in public transport (includingbuses and parking at stations) if it is to avoid ever increasing levels of congestion. There is a need tointroduce an effective traffic monitoring system across the region to determine if RSS/RTS policies arehaving any effect. The Highways Agency intends to introduce “Influencing Travel BehaviourProgrammes” (ITB) in the region in 2007 and there is a need for the region to support these tomanage demand and so reduce congestion. The region also needs to think carefully about newdevelopments and public transport access to them, with developers taking account of the impact thatsites will have on the strategic road network, working with the Highways Agency.

Key barriers / threats are funding availability for implementation of Local Transport Plans andintroduction of wider demand management measures such as road user charging. DfT intend topublish the rail High Level Output Specification (and associated Statement of Funds Available) inSummer 2007. This will set the levels of investment the Government plan to put into the railways andwill influence how many of the Route Utilisation Strategy proposals are deliverable. Funding is the keyconcern for delivery of the Manchester Rail Hub and Metrolink. Finally lead organisations identifiedthe need to invest in R&D to reduce environmental impact of increased aviation traffic, building onwork currently being undertaken by MMU in “Clean Aviation”.




LAND USE

Progress: Good progress is being made in implementing the Strategic Regional Sites and this issummarised in the Annual Monitoring Report. Sub regions are developing plans for investment insub-regionally important employment sites and premises.

Data: The data for this RES factor gives mixed messages and much of it has not been updated.There has been a substantial increase in the square metres of floorspace developed in the Northwest,but a reduction in the percentage of this in regeneration areas. The percentage of houses built onbrownfield land has increased.

Implications & further action/ barriers: Two issues have emerged in relation to this factor. Firstly theissue of adequate power supplies to key sites. This is becoming an increasing issue in parts of theregion, both for existing businesses wishing to expand and new site development. The region needsto consider how it tackles this issue. The other issue is the availability of funding to develop sites/premises to a point where the private sector is willing to invest – joint ventures are sometimes usefulto reduce public sector risk, but seed corn funding may be needed in some cases.

HOUSING

Progress: The framework for housing provision has been set by the Regional Spatial Strategy andRegional Housing Strategy. An action plan on affordable housing has also been developed. Subregions have carried out housing assessments and are producing housing strategies with a focus onthe link between economic strategy and the housing offer. Progress is being made via the HousingMarket Renewal areas in developing plans for investment linked to economic renewal and significantoutputs have been achieved in terms of new housing provision and renewal.

Data: The indicators used may need to be reviewed to reflect the suite of indicators being used tomeasure the success of Pathfinders. However current data shows mixed progress on this factor, withthe ratio of house prices to earnings in the Northwest lower than in England, although increasingfaster. (It can be argued whether this is a good thing or not). The number and percentage of lowdemand dwellings and percentage of vacant dwellings have all also decreased relative to England.Although the % of unfit dwellings has increased, it has increased relative to England. The numberand % of Local Authority dwellings has increased (again it can be argued whether this is a goodthing or not).

Implications & further action/ barriers: A key issue of concern is the continuing disparity betweenincomes and house prices and the impact on affordability and access to housing for key workers.Ensuring a mixed economy of provision of housing types and tenures at a range of prices cannot beunderstated in creating the conditions for economic success. Further work to align the plans of theRegional Housing Group and RES, and achieving housing/economic renewal through HousingMarket Renewal areas will continue to be of vital importance.



PLANNING

Progress: There has been limited progress in this RES factor. The RSS sets the planning frameworkfor the Northwest. Northern Way is doing some research into utility issues using the Manchester CityRegion as a case study. Other than this, no progress has been reported.

Data: Much of the data for this factor has not been updated or shows no change from the RESBaseline Report

Implications & further action/ barriers: The key issue raised here is the forward planning neededby utility companies and local authorities to ensure an appropriate utilities infrastructure, especiallypower. This applies not only to new sites and expansions of existing businesses, but also to the largerinfrastructure needed to transfer power from its place of generation (sometimes offshore windfarms)to its place of use. This is becoming an increasingly important issue in the region and one which willact as a barrier to growth if the region is not careful.

ENERGY

Progress: Limited progress on this RES factor has been reported, although the Northwest EnergyStrategy continues to be implemented

Data: There have been no data updates on this factor

Implications & further action/ barriers: Ensuring efficient use of energy and alternative sources ofgeneration will remain an important issue for the Northwest. Energy and Environmental Technologiesare one of the six priority sectors and could represent a source of competitive advantage for theregion.

INVESTMENT

Progress: Good progress has been made in terms of ensuring the new ERDF, ESF and RuralDevelopment Programme for England (RDPE) programmes in the region reflect the RES, and thedevelopment of the Northwest Regional European Partnership. Work to align regional strategies hascontinued and SRPs have produced action plans for their sub region aligned to the RES. GovernmentOffice also considers alignment of LAA 4th Blocks to the RES as appropriate. Limited progress hasbeen made in mechanisms to stimulate private sector investment, although a major Northern Waystudy has been commissioned on this as it is now one of only 3 priorities for the Northern Way.

Data: Appropriate baselines for this RES factor still need to be established.

Implications & further action/ barriers: The role of the public sector in economic developmentmust be to create the conditions where the private sector is willing to invest. Understand mechanismsto stimulate private investment is therefore essential to the economic regeneration of the region. Assuch the Northern Way Study, and any mechanisms introduced as a result of the ComprehensiveSpending Review will be of great importance to the region. On European issues the region needs toexamine its representation in Brussels to ensure it has the right resources in place to benefit from theEU agenda in all areas including structural funds, R&D funding, agricultural support, and otherbudget streams.




Quality Of Life

CULTURE AND IMAGE

Progress: Good progress has been made in marketing the region and in developing the culturaloffer (including announcement of the Capital of Culture programme, planning for 2012 CulturalOlympiad, planning for Preston Guild in 2012 and developing new cultural centres in Chester andCrewe). The region bid for or supported 14 major events during the year. Key developments in thetourism attack brand locations included Hadrian’s Wall Heritage Board and the Chester Culture ParkBoard being formed and the Lake District Vision being published as well as progress with LowtherCastle, Chester SuperZoo and significant developments on the Liverpool waterfront. Slower progresswas made on the Manchester Conference Quarter and the decision not to award the regional casinolicence to Blackpool has obvious implications.

Data: None of the data for this RES factor has been updated since the Baseline Report.

Implications & further action/ barriers: Culture and the Visitor economy are clearly very importantto the regional economy, both in terms of the GVA / number of jobs that they support directly and interms of making the region somewhere where people want to live, work and invest. It will be essentialto ensure that the product on offer in the Northwest is second to none in terms of key tourismlocations and individual tourist offers. Ensuring a lasting legacy from Capital of Culture is vital,particularly with future investment likely to be tight in part due to London 2012. Further progress stillneeds to be made to develop the Business Tourism Offer of the region, although the new Kings DockArena will help in this respect.

COMMUNITY

Progress: Mixed progress has been made in this factor. The Northwest Reducing Reoffending ActionPlan is in place and a programme of capacity building events and good practice masterclasses runby RENEW. Progress with developing a Voluntary Sector Strategy has been slower than planned. TheNorthwest Equality and Diversity Action Plan has been developed but year 1 actions are still currentlybeing reviewed. Finally limited progress has been reported on the Investment for Health StrategicPlan and Implementation Plan.

Data: There is mixed evidence from the impact measures on this factor, with levels of burglaries, carcrime and violent crime decreasing, but worry about most of these forms of crime, and our positionon these forms of crime relative to England, getting worse. Other measures such as the employmentrates of disabled, non-white and the over 50s have improved as has the number of local authoritieswith 4* rating. The data gives mixed evidence about whether disparities within the region are gettingworse or not.

Implications & further action/ barriers: There is considerable activity in this factor, but it is difficultto see if this is all having the desired impacts in creating cleaner, safer, greener communities,developing community cohesion and developing high quality local services. There is a concern thatmilestones being measured for individual RES actions are not getting to the heart of the issues increating sustainable communities. Local authorities, LAAs and the voluntary sector all have a crucialrole to play in this regard. The Voluntary Sector strategy and ensuring full implementation of theRegional Equality and Diversity Action Plan will therefore be very important. The new NationalImprovement Strategy (CLG) will set the context for work in developing sustainable communities andthe region will need to prioritise this action, giving guidance to the proposed Regional ImprovementPartnership.



ENVIRONMENT

Progress: Good progress has been made with implementing the Natural Economy Northwestprogramme to develop the economic benefit of the region’s natural environment. Progress has alsobeen made with plans for a number of the regional parks. The Lake District Vision has beenpublished, but limited progress has been reported to date in its implementation. The NewlandsProgramme has been delivered and the Regional Forestry Framework Action Plan is in place. A draftdelivery plan for the Strategy for Sustainable Food and Farming (SSFF) and the regional Food andDrink Strategy have been produced. Good progress has been made in key elements of the publicrealm of the region, including the Manchester Oxford Road masterplan, Liverpool Mann Island, theMersey Waterfront Regional Park and Blackpool Seafront. A good practice design guide has beenpublished and improvement made to flood warning and flood protection at key locations.

Data: Most of the impact measures used in this factor have not been updated since the RES BaselineReport was produced

Implications & further action/ barriers: Delivering quality public realm is essential to create anenvironment in which people want to live, work and invest, as is making the most of the region’snatural assets. There is a concern that the region does not have a clear plan about the key publicrealm improvements which would make the most difference to the economy. The key barrier that leadpartners identified in implementing this factor is funding. Implementing high quality in the design andcommissioning of the built environment needs support from all key partners in the region. If theregion is to “future proof” physical development projects and ensure sustainable development, keystrategic tensions within the regional policy framework highlighted as part of the aligning regionalstrategies work, must be taken seriously.


NWDA H6-01

June 2007

The Northwest Regional Development Agency managesall operations from its Headquarters at:

PO Box 37Renaissance HouseCentre ParkWarrington WA1 1XBTel: +44 (0)1925 400 100Fax: +44 (0)1925 400 400www.nwda.co.uk


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