South West RDA Chief Executive Jane Henderson describes the Agency’s approach to making a series of difficult budget decisions, announced yesterday – and what this means for the future of economic development in the region

The credit crunch and subsequent recession continues to hit businesses, communities and families hard across the whole of the South West this year.  As you might expect, it’s no different for organisations such as the South West RDA.  Like many of you, we’ve had to take some difficult decisions to make sure ends meet. 

Our announcements yesterday (Monday) confirm that we have £56 million less in our programme investment budget over the next two years. We still have a major investment programme across the region to deliver, but regrettably, we are having to pull back from, or reduce our commitment to, some good projects that we would otherwise have supported, and there will be disappointment for some who had been looking to us for support.

Despite this, I’m glad to say that we will be able to continue with most of our planned projects, and we remain whole-heartedly committed to a substantial programme of targeted investments to help our regional economy emerge strongly from these testing times.

So, why the pain?  As we drew towards the end of 2008, and as the recession started to really bite, a number of factors emerged which will have a significant impact on our budgets for this year and next:

 The government’s 2007 Comprehensive Spending Review, which meant a a 5% year-on-year reduction in budgets for RDAs, has come into play.

 We expect our capital receipts – money we re-cycle from sales of our development assets – to be down by at least £30 million.

 We have had to manage the effects of government reprioritising public sector funding.  Last autumn, for example, some £26 million of South West RDA budget was re-directed by government to help fund the Homebuy Direct scheme, designed to help struggling families keep their homes.

We remain committed to many hundreds of important economic development projects across the South West.  In five particular areas – Plymouth, Bristol & the West of England, Swindon, Gloucester and our support for the aerospace industry – all areas where we are involved, along with others, in a number of significant projects with a potential call on our funds, we have decided to set an upper limit on what we can support over the next two years. We are talking with partners in each of these areas about prioritisation and where we can best to invest our limited resources over this period.

In other important regional centres – such as Exeter and Torbay – we will complete our current portfolio of important work and then take a fresh look at future investment plans beyond 2012.  And in Cornwall we will continue to work with partners to secure EU funding for a variety of strategic projects, although here too we have had to limit our involvement.

We will continue to spend significant sums on help for businesses across the region through our funding of Business Link, Solutions for Business, and our new small business loan fund.  We intend to add value by prioritising investments with the potential to transform the region’s economy, investing in the industries and skills for the future.  For example, by investing in a pilot phase of Business Technology Centres, and by making further, targeted, investments in support of our world class aerospace cluster. And our commitment to the low carbon agenda and renewable energy – and the  “green jobs” that will be created as these develop into global industries in the future - has been reinforced. As part of this, we have confirmed our investment in the iconic Wave Hub project, and will by making substantial investment in a new nuclear skills academy based in Somerset. 

There are other areas where we have reluctantly had to take a different approach.  Regrettably, there are a number of ‘public realm’ projects –about improving town centre public space – to which we have had to say no -  for example in Burnham-on-Sea, Cinderford, Newent, Trowbridge and Weymouth.  We will not be able to support financially the proposed Gloucestershire Incubation Network, although we will still help partners develop their proposals.  We will not be able to help fund the compulsory purchase of Westmoreland House close to Bristol city centre.

We will also need to reduce our own staffing levels and accompanying overheads in the coming year to match this tighter portfolio of work.

We have done our very best to act in the best interests of the wider regional economy.  We know there are some tough messages for many of our partners, businesses and communities who have  expectations of RDA backing and support.  But our investments over this next two-year period remain significant – over £260m – and we will be working hard to ensure that this money unlocks yet more investment from the public and private sector to drive our economy forward.