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Delivering for the Region
Improving the Economic Performance of Englandâ€™s Northwest 1999 - 2007
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Introduction During the 1980s and 1990s, the economy of the Northwest experienced a period of restructuring and underperformance. The Northwest Regional Development Agency (NWDA) was established in 1999 to provide business led direction to the region’s economic development and to establish clear economic priorities to drive public and private sector investment. The role of the Agency has developed and its emphasis now is on providing strategic leadership for the region and helping provide a catalyst for economic growth. Since 2000, the Northwest’s economic performance has been strong, with 180,000 new jobs created between 2000-2004 and faster growth than the average for England. The Northwest is a £106 billion (2005) economy, the third largest in the country, with 6.8 million people (13% of England’s total) and 242,000 firms (12% of England’s total). However, there is still much to be done to realise the region’s potential. This report summarises the economic performance of the Northwest since 2000 and the role that the Northwest Regional Development Agency has played in making a lasting impact on the regional economy.
Summary The table below summarises the economic challenges that faced the region and how the Agency and partners have responded to these.
To increase levels of economic activity The region’s economic activity rate in 1998 was 75.4%, lower than every other English region except for the North East and 3.5% behind the England average.
Economic activity rates in the Northwest have increased between 1998 and 2005 at a faster rate than any other English region. The gap with the England average has reduced to just 1.7%, the differential having halved during the last 7 years.
To increase levels of business formation In 1998 the Northwest had 50,000 fewer businesses than the England average.
Between 2001 and 2005 the number of Northwest business start-ups grew faster than the England average.
To increase the number of people with qualifications In 2000 19% of the Northwest population did not have any formal qualifications.
In 2005, the proportion of people with no qualifications had fallen by 76,000 people to 17%.
To increase the levels of innovation and research in the region The region faced a potential reduction in public and private sector science and innovation capability following the loss of the major ‘Diamond Synchrotron’ project from Daresbury to Oxford in 1999.
Daresbury Science & Innovation Campus was identified as a major research centre by Government. World class centres of excellence such as the National Biomanufacturing Centre were established in the region. The region is now recognised as the 2nd largest biotechnology cluster in the UK.
To improve the region’s environment In 2002 the region had 11,770 hectares of previously developed land, 18% of the national total.
By 2006, 3,700 hectares of brownfield land had been reclaimed or remediated through Agency investment, freeing space for business, housing, employment and leisure.
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NORTHWEST REGIONAL DEVELOPMENT AGENCY PERFORMANCE The Agency was one of the first RDAs to be assessed by the National Audit Office in 2006, being awarded a “Performing Strongly” rating, the highest ranking available. The assessment recognised key strengths including strong partnership working, effective leadership, strong financial control, commitment of staff and record of achieving outputs. Since its inception the region has: • Created or safeguarded 161,200 jobs (23% of the national RDA total), which would fill Old Trafford twice over • Reclaimed 3,700 hectares of brownfield land (33% of the national RDA total), equivalent to a town the size of Blackpool • Levered £2.1 billion of private sector investment (30% of the national RDA total) • Created 12,000 new businesses (21% of the national RDA total)
THE REGIONAL ECONOMIC STRATEGY The Regional Economic Strategy (RES) is developed on behalf of the region by the NWDA working with a wide range of partners. Launched in March 2006, the current RES was developed by a regional advisory group of the public and private sector working together to agree the region’s key priorities. It represents a major step forward for the region, setting out a clear vision for the economy and identifies specific actions to meet the economic challenges and opportunities of the next ten years. The RES now provides the region with a clear set of priorities with which to align public sector policy and private sector investment. The RES identifies three major drivers behind the Northwest’s economic performance: 1) Improving productivity and market growth - increasing the number of higher added-value jobs in the region, as well as retaining existing high value jobs through investment in innovation, research and leadership. 2) Growing the size and capability of the workforce – getting more people into work, especially in the region’s most deprived areas, amongst disadvantaged communities and areas remote from growth. 3) Creating the right conditions for sustainable growth and private sector investment – through investing in the region’s environment, culture, infrastructure and communities.
IMPROVING PRODUCTIVITY The performance of the Northwest economy has been steadily improving since 2000. Between 2000 and 2005, the economy grew by £22 billion (27%) to £106 billion.
Improving competitiveness NWDA programmes have helped Northwest businesses to improve their competitiveness, providing support to 66,000 companies aimed directly at helping them become more innovative and productive, to access new markets and to gain access to management advice. The Northwest’s manufacturing sector is the biggest of any English region and remains a major driver for improving GVA, contributing £18.6 billion to the regional economy. Through the Manufacturing Advisory Service (MAS) and a Manufacturing Action Plan, the sector’s economic performance has increased year on year. Between 2002-05, the MAS helped client companies achieve £32 million of added value, equivalent to a 9% average increase in turnover.
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Supporting the region’s key growth sectors The priority sectors outlined in the RES account for 55% of the region’s GVA. By building stronger business networks in these ‘clusters’, the Agency and its partners are encouraging growth activity and new investment into these sectors. The Northwest is home to a diverse range of strong internationally competitive sectors, including biotechnology. Through Bionow, the NWDA led biotechnology cluster programme, the Agency has developed the £30 million National Biomanufacturing Centre at Speke, Merseyside. The centre is the first of its kind in the UK and provides expertise and facilities to support new and existing biotechnology companies, a unique service for the process development and manufacture of biotechnology medicines, including vaccines.
Creating new businesses Since 1999, 12,000 new businesses have been created by NWDA activities. These new business start-ups represent 5.9% of the current regional business base, out-performing the English average of 3.1%. Entrepreneurial attitudes within the region have also risen during 2000-2004, in contrast with the national trend. Over the last three years, new seed and venture capital funds have been established to boost growth in the Small to Medium Sized Enterprise (SME) sector. These funds* have collectively invested £55 million in 115 companies. NWDA funding for these schemes has levered in £39.4 million from the private sector with the North West Business Investment Scheme generating an eight-to-one leverage rate. * including the North West Equity Fund, the North West Business Investment Scheme, Rising Stars Growth Fund and the North West Seed Fund.
Encouraging science and innovation The Northwest hosts a number of major world-class industrial research centres, with total business research and development investment amounting to £1.69 billion (2004), 12% of the UK’s total. In 2005/06 1,800 businesses were supported to develop collaborations with the region’s knowledge base, more than any other region. Following the loss of the major £600 million ‘Diamond Synchrotron’ project from Daresbury to Oxford in 1999, the Northwest faced a serious threat to public and private sector investment in its science and innovation capability. Through strategic leadership the Agency provided a proactive response to this with a number of initiatives, including leading the creation of the first regional science council in the country. Publication of a Regional Science Strategy in 2002 was followed by a succession of projects including the launch of the Northwest Science Fund. The development of large scale projects such as Daresbury International Science and Innovation Campus led to the Daresbury site being identified as one of two major “bipolar”research centres in the UK by the government. In medical research, the NWDA has provided investment of £9 million to the Liverpool School of Tropical Medicine for the creation of a new Centre for Tropical and Infectious Diseases. This has levered in £29 million from the Gates Foundation to fund an international malaria research programme.
Strong Universities and collaboration with business A number of significant projects have been supported to develop greater links between business and Higher Education and encourage universities and colleges to play a larger role in the regional economy. The merger of the Victoria University of Manchester and UMIST in 2004 was supported with a £34 million investment, which helped to create an institution with over 31,000 students and a turnover of £430 million. The new University of Manchester is the largest university in the UK, with the size and the resources to compete on a global scale.
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In Cumbria the NWDA is working with partners on the establishment of a University of Cumbria, which will widen HE opportunities within Cumbria and build a portfolio of courses to both retain young people and attract students from other parts of the UK and overseas. It will include a focus on the high level skills needed within the nuclear sector, where the Agency is also working with the Nuclear Decommissioning Authority to establish a national Nuclear Skills Academy to provide vocational training to meet employer needs of the future.
Through its leadership of the Regional Skills Partnership the NWDA has strengthened the region’s capacity to set priorities for skills based on employer need. By developing 19 Sector Skills and Productivity Alliances (SSPA) to help bridge skills gaps, a step change is being delivered in identifying employers’ skills needs and responding to these needs in order to improve productivity. The Agency has improved employment prospects and reduced the number of people out of work, helping 3,500 people improve their basic skills in 2005/06. Those of working age qualified to NVQ level 4 has risen by 3.5% between 2000 and 2004, with 1,100 people helped to gain these qualifications in 2005/06.
Inward Investment The NWDA has been directly involved in attracting over 200 inward investments into the region, which have created or safeguarded 36,600 jobs. Between 2002 and 2006, the Northwest was the top performing UK region in attracting jobs through inward investment. Overseas marketing, in collaboration with partners, is adding value to high growth business sectors. In the financial services sector, the US based Bank of New York selected Manchester to be the base for a new operations centre. The investment is expected to create up to 750 jobs by the end of 2008. JPMorgan followed suit and have located their new venture JP Morgan INVEST in the newly revived commercial district in Liverpool city centre. The move represents a significant investment for the region and will create over 150 jobs in five years.
Increasing exports The value of regional exports between 2000 and 2005 has risen by £2.3 billion to £19.1 billion with 1,100 more Northwest companies now exporting. The Northwest is currently the 3rd highest exporter of the English regions. In partnership with UK Trade & Investment (UKTI), the NWDA is working to improve export performance through programmes such as Passport to Export, with export value now equivalent to 17% of regional GVA (2004). For every £1,000 invested in the programme, over £40,000 of new international trade has been generated.
GROWING THE WORKFORCE The region had one of the lowest employment rates in England in 1998 at 70.9%. Between 1999 and 2005, the Northwest employment rate rose six times faster than the English rate and the Agency has created and safeguarded over 161,000 jobs. In addition, economic activity rates have increased between 1998 and 2005 at a faster rate than any other region to 77.1%, an increase of 100,000 people.
Promoting inclusion into mainstream economic and social life Recognising the need to deliver social and community regeneration, communities are being supported to develop local solutions to issues through the Market Towns Initiative. This major investment programme supports 17 Market Towns Partnerships throughout the region to help rural businesses and communities remain competitive. The initiative will result in an investment of more than £18 million into the rural economy.
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CREATING SUSTAINABLE GROWTH The Agency has provided economic leadership in the region, leading the establishment of comprehensive spatial plans on a local, sub-regional and regional level, and working with regional partners to agree the key priorities within the Regional Economic Strategy (RES). The NWDA continues to work with the Northern RDAs on the development of the Northern Way, an alliance to deliver joint activity to help bridge the £30 billion output gap between the North of England and the average of the other English regions. The creation of Urban Regeneration Companies (URCs) including West Lakes Renaissance, Liverpool Vision and New East Manchester has enabled the delivery of large scale economic interventions at a local level through collaborative masterplans and focused investment. The Agency has also worked closely with partners to achieve URC status for Blackpool and Central Salford. New East Manchester (NEM) is a partnership initiative between the NWDA, Manchester City Council, English Partnerships and the communities of East Manchester to deliver sustainable economic growth in previously derelict parts of the area. The Agency’s influence has helped lever in £1.2 billion of private sector investment to create and safeguard over 3,000 jobs, construct 500,000 sq ft of new business floor space and deliver 3,500 new homes with a further 3,500 planned.
Responding to economic crises Since its inception, the Agency has taken swift measures to combat a number of specific economic challenges. The Foot and Mouth epidemic in 2001 had a severe impact on the region’s rural economy. Cumbria alone experienced over half of the total notified cases in the UK, with forecasts estimating a drop in GDP of £270 million and 12,300 jobs at risk as a direct result of the crisis. The NWDA provided strategic leadership by developing ‘Rural Renaissance’, a £100 million coordinated strategy for the region, focusing on rural diversification. In total it helped to create or safeguard 4,400 jobs, establish 750 businesses, assist a further 7,000 businesses and lever over £10 million of private sector investment. In 2005, flooding in Carlisle affected businesses and residents in the town. Following the floods, the NWDA announced a package totalling £275,000 to fund short-term relief measures to enable businesses and communities to rebuild as quickly as possible. In addition to these measures, the Agency led the establishment of the Cumbria Business Recovery Group to assess the economic implications of the floods and identify business support opportunities. The Agency has also taken steps to stabilise local economies in the wake of serious redundancies. When BAE Systems in Barrow announced 720 shipbuilding redundancies in 2004, the Agency offered support to develop new opportunities, including investment in new technology and upskilling 900 employees to support future submarine contracts.
Sustainable land use By 2006, 3,700 hectares of brownfield land (31% of the total delivered in England) had been reclaimed or remediated through Agency support, creating space for business, housing, employment and leisure opportunities. Partly as a result of this, the Northwest is one of only three regions to see an increase in office accommodation rentals, rising from 81.2% of the UK average in 1998 to 91.9% in 2006. Between 2002 and 2006, the NWDA remediated more than double the amount of derelict and vacant brownfield land than any other region, an area equivalent to the size of Blackpool. This has been achieved through programmes such as Newlands, which is redeveloping 435 hectares of derelict land across the region. Through regional parks, regeneration schemes and woodland programmes, a new tree has been planted in the Northwest every two seconds of every working day between 2000 and 2005, equating to 20 million trees.
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Investing in transport and communications The Agency has worked closely with the North West Regional Assembly and Government Office for the North West to agree, for the first time, the transport priorities that will have the greatest effect on the regional economy. These recommendations have been submitted to the government via the Regional Funding Allocations, which provides advice on how funding for economic development, housing and transport can be most effectively spent in the Northwest for the next 10 years. The Edge Lane Project, a comprehensive regeneration scheme that will create an improved gateway into Liverpool, is being led by Liverpool Land Development Company and the NWDA. An initiative to complement the city’s wider regeneration, the programme will include the development of mixed residential, leisure and commercial development and is expected to lever in £120 million of private sector investment.
Quality of life Public perceptions of the region’s image and business leaders’ confidence in the Northwest have both shown significant improvements since 2001 as measured by MORI in a unique tracking study. The Agency has also reorganised support for the tourism industry in the region, creating five sub-regional tourist boards to act as the primary delivery partners for tourism in their sub-regions. A regional Tourism Forum provides industry leadership to a sector which experienced a 40% increase in overseas visitor spending between 2001 and 2003.
Following the success of the 2002 Commonwealth Games in Manchester, and in conjunction with regional partners, the NWDA led the formation of a Strategy for Major Events in England’s Northwest – the first English region to do so - to capitalise on the benefits that can be achieved through hosting events of this nature. Major events secured by the region include The Tour of Britain, Paralympic World Cup and the World Swimming Championships 2008. The Agency also supported Liverpool’s successful bid to host European Capital of Culture 2008. The Events Strategy has generated £40 million for the region since 2004.
THE FUTURE The NWDA and its partners will continue to build on the progress of the last seven years. The Regional Economic Strategy is widely accepted as the economic blueprint for the region with clear priorities and challenges for the next decade identified within the RES. The targets set out in the RES are ambitious. Key targets to be achieved between 2006 – 2009 include achieving GVA growth above the England average, creating 150,000 new jobs, raising new business formation to 21,000 per year and increasing the number of graduates in the workforce by 120,000. Whilst the targets are ambitious, there has already been considerable progress towards achieving them. The region needs to focus on major transformational actions that will make the most impact on GVA and many of these have seen significant developments in the last year, including the second Mersey crossing, the creation of an international media hub linked to BBC relocation in Greater Manchester and the reorganisation of Business Link. With a remit increasingly focused on providing strategic leadership, the Agency will continue to work with government and regional partners to drive economic growth in the Northwest.
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The Northwest Regional Development Agency PO Box 37 Renaissance House Centre Park Warrington WA1 1XB Tel: +44 (0)1925 400 100 Fax: +44 (0)1925 400 400
www.nwda.co.uk www.englandsnorthwest.com www.visitenglandsnorthwest.com
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February 2007 NWDA H1-10