Regional economy at a crossroads

With a major review of the regional economy currently under way, BQ asks one of the influential business leaders behind it, Heidi Mottram, for a progress update.

Heidi Mottram INSETIn autumn 2012 the North East Local Enterprise Partnership (NELEP) commissioned a high profile team of leaders from UK finance, industry, public and civil society to produce a strategic, constructively critical review of the North East economy. The private-sector led review team includes Will Hutton, former editor in chief of the Observer, now chair of the Big Innovation Centre and principal of Hertford College, Oxford; Lord Don Curry, leading businessman and chair of NFU Mutual; Bridget Rosewell, economist and chair of Volterra Partners; and the Right Reverend Justin Welby, the Bishop of Durham. Also among the influential band of business leaders is Heidi Mottram, CEO of Northumbrian Water and member of the CBI’s national infrastructure panel. Here she gives BQ Yearbook an update on how the commission is shaping up.

BQ: Is the commission making good progress so far?

HM: Yes. In addition to meetings and conversations in the region and London involving the review team, the nine experts from across the UK, wider EU and USA are all fully engaged on their think pieces and preparing for seminar events in January. The university-led call for evidence from businesses in the region has been going very well, and Sunderland and Northumbria deserve much praise for the way that they have immersed themselves in this. We’re getting good support from Whitehall departments too, including really generous secondments from DfT. There’s much going on but a lot still to do.

How often is it meeting and where?

Andrew [Lord Adonis the chairman] has asked us each to lead on particular workstreams and so we are each beavering away with the LEP executive team, keeping the connections between us going. Just last week Will Hutton was in the region at the Franco-British Council event. The commission will get together from mid January to compare notes and begin to form conclusions - sometimes in the North East, sometimes in London.

Is it getting the level of input it would like from outside bodies of the region, and does it detect sufficient sense of involvement?

We’re focused on the right things for the two million people who live in the NE LEP area. Of course this means that we’re also engaging with near neighbours and with those at the other end of supply chains and decision making processes.

Will the commission consider setting a programme of action for the North East’s future economy in a situation where its neighbour and regular inward investment rival Scotland became independent?

We’re not going to second guess every possible scenario - we’d never finish - and I think that the answers for the NE LEP will be very similar in a UK with or without Scotland. We are in a global marketplace so this question is small compared to the competitive issues we face in Europe and globally. We need better education and skills outcomes, better physical and virtual connectivity and the best possible environment for enterprise to flourish and people to have prosperous and fulfilling lives, whatever the end point of that debate.

Will LEPs be confirmed ideal machinery for administering regional economies up to 2030, or will alternatives be considered?

This is not something that the review is considering and I’m not sure that the LEP is precious about anything other than the future prosperity of the North East.

If LEPs are felt to be fit for purpose will the commission examine the argument by the Federation of Small Businesses that the LEPs need more adequate core funds to deliver full potential?

As I said before, the issue of LEP’s isn’t something that the commission is considering.

Will the commission make recommendations about the CBI’s contention that LEPs should be encouraged to work collaboratively?

The commission will consider key considerations to grow the North East economy, where these considerations include cross LEP working to get best results I am sure the business community will encourage the LEPs to do this. The CBI wants to ensure sensible collaboration to get the best outcomes. From my understanding, there is already quite a bit of dialogue and cross working which I encourage.

Will it also consider the CBI’s recommendation that the Regional Growth Fund (RGF) should be reformed?

The RGF is one tool available to the LEP and the region’s businesses. It is a short term opportunity for businesses to bid for investment based on their ability to create jobs in the short term. This is important in light of current unemployment but the commission is also looking to the longer term so will be considering how we deploy a range of policies – those currently available and potentially asking for new approaches or flexibilities from government where this would create a significant return on investment for both the North East and UK Plc. It’s too early to say what changes of policy or new approaches we will be asking for as we are still in the evidence gathering stage.

Will the commission consider whether further central government investment to this end is needed?

Absolutely. But let’s not pretend that central government investment is the answer to everything. The private sector - companies such as my own - invests far more in infrastructure than sometimes people recognise. Getting the national grid ready for offshore wind is as critical to success for that sector as many things that government does.

Will the commission, on transport connectivity, consider  recommending the Government to give fuller and more satisfactory consideration to the urgent need of more air slots for accommodating flights between the North East and London as a central hub?

We’ll look at the connectivity of the region to all places - and won’t be shy about what the level of aspiration needs to be.

Will the commission consider whether the North East needs two airports and how such an ongoing facility will be supported?

The commission is looking at connectivity at a national and global level, to give the North East the best possible offer in our markets. That connectivity is the real issue and how it can best be delivered.

Given the outstanding success for North East business which is resulting from the introduction of international daily flights to and from Dubai (via Emirates), will the commission argue that regional airports should be supported to introduce more of the same such as, in Newcastle’s case, daily connections with New York?

The North East trades, and by value the USA is our most important trading partner. Connections to many destinations in the States are critical, and since this will mean access through a hub it is vital that both the existing Heathrow and Amsterdam links are maintained as well as promoting a direct flight to an American hub such as Newark. I think with air travel and the North East there really is an argument for “build it and they will come”, but clearly this is a commercial decision and that belief will need to be evidenced for a carrier to open a new route.

Will it consider whether, on the East Coast main railway line, the North East’s place in an HS2 era should have higher visibility than it is getting presently?

Absolutely. Andrew, Bridget [Rosewell] and I all have direct but different expertise in rail and will be giving this particular attention. We know that connectivity boosts employment and adds value and opportunity, and what is more, rail is the most sustainable means of mass transit.

Will the commission back up its own arguments with the recent finding of a YouGov study, to effect that the North East will be given better recognition as a place for UK start-ups as economic dependence on the South East recedes?

Although the stats on VAT and company registration suggest fewer start ups in the North East than elsewhere, the level of support for SMEs - in particular access to venture capital for those who reach this stage - is probably as good here as anywhere. And for companies that find their niche the chances of bounding into very high growth are as high here as anywhere. Could the environment for start ups be better? Yes of course, and I don’t doubt that we’ll have things to say about the quality of corporate leadership, enterprise acumen and the availability of support for new and growing companies.

Will the commission give social as well as economic consideration to the fact that nearly 25% of North East households have no-one in work, on ONS reckoning?

The LEP has asked us to target employment and productivity, which is an economist’s way of saying that we’re wanting the region to offer active and rewarding lives to everyone. The biggest advance in productivity for an individual is moving into work, and with the right social environment around us that move into work heralds independence, choice and more control over your future. So recommendations whose effect reaches everyone, in work and out of work, are key to meeting our stated objective.

Heidi Mottram, thank you.