Uncorrected Evidence 544

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Oral Evidence

Taken before the Environment, Food and Rural Affairs Committee

(Environment, Food and Rural Affairs Sub-Committee)

on Monday 12 May 2008

Members present

Mr Michael Jack, in the Chair

Mr David Drew

Miss Anne McIntosh

Dr Gavin Strang

David Taylor

________________

Memorandum submitted by Local Government Association, Regional Development Agencies

Examination of Witnesses

Witnesses: Ms Christine Reid, North Wiltshire District Council and vice chair of LGA's Rural Commission, Mr Ivan Annibal, Assistant Director of Economic Regeneration, Lincolnshire Councils and Mr Tim Allen, Program Director Local Government Analysis and Research, LGA, gave evidence.

Q72 Chairman: Welcome to this very select group, both in terms of our witnesses, members of the public and the Committee. We are going to make a start because we would like to get into this as quickly as possible. May I formally welcome Christine Reid who, apart from being the vice-chairman of the Rural Commission, is also a member of the North Wiltshire District Council; Mr Ivan Annibal, the assistant director of Economic Regeneration for Lincolnshire Councils; and Mr Tim Allen, the programme director for the Local Government Analysis and Research Organisation. Can I thank you for your two items of written evidence, which we very much appreciate, and for your forbearance. As I was explaining last week, the Committee was blown somewhat of its original timetable for this inquiry by a number of items of business including the floods of last summer. We have not been able to get to this as quickly as we would like but we have now re-focused the inquiry into the area that you have kindly submitted information on. One of the things we heard last week from our witnesses was this question of Defra's definition, within its new target, of a strong rural community. We are quite intrigued to understand what people make of this term "a strong rural community" and whether it really, in terms of its objective, adequately addresses both the complexities and the needs of rural community. If you would like to start there, that would be very helpful.

Mr Annibal: A strong rural community is one that has a balance of opportunities for people. It is a place where individuals can have a house, a job and a reasonable quality of life. In the way that rural communities have evolved over the last 10 to 15 years, those things have become, in a number of places, quite dislocated. The challenge is to try and find a way of managing rural economic development to try and create some greater cohesiveness around the way places work in rural areas.

Q73 Chairman: We are going to talk in more detail about the DSO which Defra have, because it took the place of PSA4 which we used to keep asking questions about. Defra could never provide any evidence about how you could measure particularly productivity in the rural economy so it is quite useful, in a way, that that has gone. Do you think that the Departmental Strategic Objective, as currently stated, is the right one and, if you do not, what would yours be?

Mr Allen: You are right to ask what one understands by strong rural communities and Ivan has given you a view that we would subscribe to. The value of having this indicator, this performance target, is that it still highlights the importance of rural areas and the needs of rural areas in wider government policy. The nirvana would be that all areas are reached according to their needs in terms of mainstream policy. The value of this particular target actually highlights that there are particular rural needs that need to be met. One could debate the semantics of that but on that basis we would welcome it.

Ms Reid: When you link across the tie-in of the bundle in the second section, the socio-economic bundle, it ties in very specifically to the topics that appear within the Local Area Agreement so there is a follow through from the ideas of strong rural communities that have been described to the way in which local authorities are now encouraged to develop those communities. You will hear, in the course of what we have to say, that we have some anxieties about Defra and rural areas and so we are very pleased to see this remaining.

Q74 Chairman: Do you want to tell us about your reservations in that respect? You have whetted my appetite so please satiate it.

Ms Reid: When Defra was created local government was delighted with the focus on local communities and on the wider rural agenda with two White Papers and a very active Minister of State. Since the other parts of Defra's agenda, climate change and the environment, have risen up the national agenda we have seen the decline of the rural affairs part of Defra, the reduction in size and the reduction in the civil service, and the lessening of interest in what local government is doing and managing to achieve in rural areas, with a great deal of sadness.

Q75 Chairman: One of the problems with Local Area Agreements is that it very much follows political boundaries, but economic activity does not always follow those boundaries. How do you get around that problem? Can you just describe the mechanism? I keep reading in the briefings we have had that the way forward is through Local Area Agreements and my first question is has anybody produced one which addresses the needs of the rural economy and, secondly, if one has been produced how did it get around the fact that economic activity does not always follow political boundaries?

Mr Annibal: The issue with Local Area Agreements is they follow administrative boundaries rather than geographical boundaries and it is the geographical context of economies that is very important. We think about administrative or economic boundaries but it is the spatial context which is most important in deciding how you should plan your interventions in a place and how it works. If you look at some of the work that has been done around multi-area agreements, which are often in partnerships where partners come together of their own volition to address particular issues, and I am thinking for example of the pan-Dorset multi-area agreement where you have Bournemouth and Poole working actively with the rural hinterlands thinking about how that works as an economic entity, then local government can very powerfully take things forward. Local Area Agreements sometimes are a little prescriptive, around 198 set targets, and particular ways of working in a way that does not always bring out the best in the organic nature of partnerships that you need. It seems to me what is really important is not to assume things work on administrative boundaries but try to understand the flows that take place between places of people, goods and investment.

Q76 Chairman: That is a very succinct and useful statement but does it fit well with the target we talked about earlier which talks about measuring things on a district by district basis?

Mr Annibal: I do not think it fits very well. The challenge is you have to have some sort of unit of measurement. The practical realities are that you can only understand places if you move away from that old-fashioned notion of a rural/urban dichotomy and you start to understand the interdependence of places. If you can look at levels of self-containment around economies then you have a much more logical basis on which to plan your interventions, but that is very difficult because each place is different in that sense and you cannot have much comparability. If you look at GVA, it works quite well at the regional level and the national level but even though it is now possible to conceptualise getting it down to district level does it really give you, in its present form, a meaningful understanding of what is happening in a particular place? My final comment on this would be if you take West Somerset and just look at the aggregate data for it, effectively West Somerset is three quarters Exmoor National Park and one quarter Minehead and just looking at the averages for it does not give you any sense of that spatial reality.

Chairman: I am going to ask my colleague, Dr Strang, if he would like to probe a bit further on the Defra target.

Q77 Dr Strang: Are you saying that the new indicators which Defra has produced to measure the success of this part of the DSO are the correct indicators? Are you happy with them or are you unhappy with them?

Mr Annibal: They are not perfect indicators by any means but it is important to have some indicators so they are better than no form of rural indicator. There are real challenges in any form of indicator which can reflect the fine grain of place, which is what you need to do in a local authority to plan your interventions. They are not perfect by any means but it is important we have something.

Ms Reid: They are workable, they are manageable and I think local authorities can deliver on them. It is interesting, because I am from Wiltshire watching the birth of a new authority with the amalgamation of various districts into a unitary authority to see what structures are being put in place to ensure that rural issues are absolutely absorbed across the whole authority. Within the structures there will be a Rural Scrutiny Executive whose task is to scrutinise, from a rural perspective, everything that local authority is doing and ensure that it is hitting whatever targets it has to hit. I think that is a very positive move. I do not think it will last for ever because it should embed into the authority as a whole. It will take a while for it to be fully embedded and I think it will help meet these targets which are so focused on Local Area Agreements.

Q78 Dr Strang: Is there adequate data at local authority level to enable the department to monitor the success of its Strong Rural Communities initiative and is there anything the government can do to help you strengthen your ability to provide that data?

Ms Reid: I can only personally speak for Wiltshire. I just received a month ago the annual economic statistics for last year. It is a very thick document and it is absolutely full of detail. I was checking up the information that was on this list over the weekend and, yes, it was all there.

Mr Allen: There is a lot of data out there and it is intelligent use of that data which is quite critical. There are areas where we need to develop our understanding, and that is something we have been looking at in the LGA because there are lots of economic data. What one needs to do is to understand the dynamics of places. You can have multi-speed economies within any given area and to plan carefully your interventions you need to understand that. If you take Shropshire and you look at Dunn & Bradshaw there are 4,000 or 5,000 registered directors of companies with a turnover of more than �5 million so your interventions probably are not going to target that group of people who have probably been very successful. On the other hand, at the other extreme, there are people who are quite clearly struggling to enter the labour market through lack of the right skills, or whatever, and where we need to head with this understanding is to use these pieces of information as diagnostics to actually understand the dynamics of place so you hone your interventions intelligently to reflect those needs. If I might come back to your point about the indicator, the term indicator is important. If the district measure is used as an indicator and as one diagnostic, that is fine; it helps you to understand at the top level what is going on within that area. If you were to use it as a pure performance measure, it becomes very quickly far too crude and does not unpack the subtleties of what is happening within a place and, therefore, what you really need to do to be successful in your economic interventions.

Q79 Dr Strang: Going back to the distinction Mr Annibal was making between the geographical boundary and the administrative boundary, do you think there is adequate data below the local authority level in terms of the indicators, and how important is that?

Mr Annibal: There is adequate data, particularly around mapping flows, but it is quite old now because it is derived from the census. Certainly in terms of looking at patterns of travel to work and patterns of migration, you can actually understand how places interact. One interesting thing is because travel to work areas are all based on a principal urban settlement if you look at rural to rural commuting you will find that 50 per cent of people in a rural area who travel to work do not actually work in it. I think you have to be quite careful with the data that is available. Around published data there is enough information to get a broad idea of the way people move between places and that is very important. The new proposed duty within the Sub-national Review for local authorities to undertake an economic assessment needs to be predicated getting down to fine grain detail. It would be quite a shame if they were encouraged just to do high level analysis. Particularly in rural areas where there is a real complexity of different environments, it is important that duty is scoped in a very broad and detailed way.

Q80 Miss McIntosh: Do the targets enable you to identify pockets of rural poverty as opposed to mass urban poverty? If it does, how are you going to, with the new unitary authority, address issues of rural poverty as opposed to in the bigger conurbations?

Ms Reid: The targets are based on district-wide areas but most authorities will go down to ward-based figures. Some wards are too large to fully identify the key blocks of deprivation although it is easier in the market towns. I do not know if it would be helpful if you described what you were saying earlier about the Office for National Statistics and the GVA figures.

Mr Allen: That is one example where we know the Office of National Statistics are developing much better local means to measure GVA which we welcome and encourage them to do as quickly as possible. In answer to your general point about the sensitivity of the measures, the indicators, as described here, are low and will not get you to identify distribution within an area because no district, let alone county, is homogeneous and, therefore, the answer to the question is no. I will come back to the point that if these are indicators that is fine, because they give you a top level view of what is happening and that is helpful and is a way of summarising the condition of a particular area overall but if you want a design policy or operational interventions you need a finer grain that these indicators. What we are saying is there are ways and means of getting at that finer grain but they are not in these indicators.

Q81 Miss McIntosh: Would you like to show us what you believe they would be?

Mr Allen: The ONS are beginning to develop much more sophisticated approaches to measuring GVA by per worker or per hour worked which allow you the ability to understand better within a small area. We know at the moment when you get below broadly county level that current levels of GVA are pretty unreliable and not very helpful. The information we understand from ONS, and you would have to ask them in more detail, they indicated to us in the discussions we had with government pre the establishment of 198 local government indicators that they had a programme of work in place that would get us to that rather more sophisticated view of GVA and, if that is the case, that is very welcome.

Q82 Mr Drew: If we look at this issue of rural proofing which is at the centre of what we are trying to get to grips with, can each of you say good examples that you have seen of rural proofing where Defra clearly had an impact on another department that has been reported to you to show that that department has taken account of rural issues, rural criteria?

Mr Allen: Whether it is purely down to rural proofing is not something I am in a position to say. Speaking in relation to transport, for example, six or seven years ago it was quite difficult to persuade the Department for Transport to develop indicators that actually genuinely measured the relationship between people and services but they have in recent years developed, with some sophistication, their ability to do just that. It is quite important, if you want to understand people's accessibility to services, that you relate the two. Whether that is purely down to rural proofing I do not know but it certainly, in part, probably was.

Mr Annibal: I have this view of rural proofing which is that it is often introduced as an 11th hour means of trying to shoe horn rural into policies that have already been established. What I am particularly attracted to is the concept of putting spatial things first. If you look at the Sub-national Review, the idea that RDAs will be combining with the regional economic strategy and the regional spatial strategy to me is very important because if you start with place it is inherent that you start by understanding the dynamics of what we might describe as rural rather than designing policies in an abstract way and then try to rural proof them or fit them into a rural context. That is one of the challenges, in some sense, to separate out rural as something almost which has to, at the 11th hour, be proofed onto something and that is a bit of a shame because it does make it seem like a second order consideration. I know the actual plan around rural proofing is the converse of that but I think the impact it very often has is that it is about a rural afterthought-type of process. I personally have not experienced anything very much at national level which demonstrates that rural proofing has been effective. I am aware of a couple of examples at local government level where rural proofing has worked quite well. For example, Leicestershire County Council has a rural partnership that looks at the implications of things like parish plans for their strategies and policies. I have seen it happen in places but I do think putting that spatial content first makes a difference rather than doing rural proofing.

Q83 Mr Drew: Do you think that Defra should drop the notion of rural proofing? Is that something that is an admittance of failure because it is not able to convince other departments they need to have a rural agenda or being complacent and saying they are doing it anyway so what is the point and this is all implicit in their policy making?

Mr Annibal: If in the mainstream it is going to be useful, it has to place due cognisance to rural and it has to have a rounded understanding of how places work and the flows between them. If you dropped rural proofing and, therefore, had no recognition of the importance of rural as a concept, that would be a retrograde step. If you had more of a means of integrating place, which is the important thing, into the way policy was designed then you would actually have rural proofing inset within the way policy is developed rather than adding it at the end.

Ms Reid: Rural proofing has had an impact in various planning policy guidance about rural affordable housing. I think local authorities, district councils particularly, have been made to think a little bit harder about how they meet some of the challenges of providing affordable housing because of changes to the planning policy and about sustainability in rural areas. You cannot simply treat them as places where you put very nice houses without worrying about how people go to and from it and work and live. There has been some success and I would not like to see it go. As a principle it is tight but it is still not fully embedded. It is quite interesting when you look at the equality and diversity work which is much further back than rural proofing that has to be embedded into all the public bodies and eventually will. At the moment you have to kick and make people think about it. Rural proofing was a lot of kicking and making people think about it initially. I think you are right to say the momentum has slipped recently but I would not like too see it go.

Mr Allen: There is also a danger of over-reliance on that as a mechanism. What we are really looking for is almost to drop the tag "rural" and actually ensure that policy interventions, wherever they are, reflect and understand and respond to the needs of particular localities. That is the goal and not simply to use rural proofing as the tool for that as a measure.

Ms Reid: It is important in the start of the policies themselves.

Q84 Mr Drew: In a sense you have identified it. We do not believe that rural proofing is doing what it should, and maybe it should not be there anyway. The idea that you strong arm departments to believe that they are going to do these things in the rural domain is not like that. How do we get to stronger rural communities which have their own destiny? Let us take schooling, for example. There is a strong determination to recognise that rural schools have their own dimensions, their own dynamics, and that should stand in its own right rather than be compared with the number of pupils compared to the number of teachers because then they will lose out. Someone will come along and say we have to close all these schools because they are not fit for purpose.

Ms Reid: You seem to have forgotten achievement in that. You do not just look at the number of pupils and the number of teachers; you have to also look at the achievement of the children in there. I would not like to see rural schools kept simply because they are rural schools if the achievement was very low and those children were being miss-served.

Mr Annibal: We did 17 case studies of rural authorities in England and the challenges they faced. We tried to come up with a very straight forward taxonomy of how you would characterise those rural authorities. It seemed to us that rather than average income, which was where we started from because we looked initially at the Defra 44, it was proximity that was very important. We thought you could have a broad categorisation of rural places in three categories: places that were relatively proximate to a large settlement, in which it seemed to us the issue of tackling things like rural schools was about understanding the relationship between a big urban place and its proximate rural settlements; places that were desirable, which seemed to buck the trend that people would not go to notwithstanding the challenges of accessibility because they were very attractive, parts of the Yorkshire Dales and bits of the New forest for example; then places that were isolated. It seemed to us that in those places that were isolated you almost needed to think about a separate suite of policy approaches. You could probably crack the issues around rural schools if you understood properly the notion of ripple out and you could manage it in big urban areas but in those isolated rural communities it was much more challenging thinking about how you planned your interventions.

Q85 Mr Drew: Were you part of the discussions with the Commission for Rural Communities' recent investigation into the impact of changes in health? They have produced this rather large pack which I am still trying to get through. What were your involvements in that and, indeed, what would your take be on what the CRC are trying to say in terms of health policy evolution?

Ms Reid: I have not seen it.

Q86 Mr Drew: It only came out last week. Were you communicated in terms of local government?

Ms Reid: We usually are. We usually get CRC publications but not necessarily instantaneously. We are a bit down the pecking order.

Q87 Mr Drew: I know you could argue you do not have direct responsibility but some of the things they are arguing link in directly to the role of local authorities: evolving common social services and health mechanisms for better treatment of older people and so on. Maybe when you have had a look at it you can drop us a note. It is quite a meaty bit of work so I am a bit surprised they have not included you.

Mr Allen: They have spoken to colleagues. What I cannot tell you is the degree of engagement we had but I can let you know.

Ms Reid: As a member of the Wiltshire PCT board, we are doing that with the Social Services Committee. We are getting as near as possible to coordination. It is the right approach very much in rural areas because of the distances groups of people have to travel to care for people.

Mr Allen: Can I respond to your point about strong rural communities in the broader sense? We probably all struggle to understand what strong rural communities means in detail. There is a process that needs to be gone through which is how policy interventions need to operate. What is very interesting is there is a real confluence between the philosophy of the OECD, the World Bank and DFID in a very different context all saying the same thing about what constitutes successful economic growth and intervention, and that is about working with the grain of the communities and the places and, therefore, being able to understand what makes places distinctive and, therefore, why you might intervene differently in Cambridge to Ashington or Easington. In the former you are really dealing with the competition for skills on a world basis and with economic success sustaining it, and in the latter you are dealing with three generations of worklessness and trying to get people back into the labour market. Therefore, what you are trying to do is to have your policy interventions sufficiently sensitive and sufficiently localised that they are able to reflect those. I have caricatured those details but you could extrapolate areas which are not quite as extreme in terms of the way policy interventions need to operate successfully. That lets us off the hook finding exactly what a strong rural community is because maybe it is about the communities themselves helping to shape what they define as being a strong community rather than having some presupposed view that you would impose upon them, heaven forbid that we should do that.

Q88 Mr Drew: Finally, these rural delivery pathfinders which came up with the suggestion as some kind of joint rural policy group, how far advanced are those discussions? Are you formally involved in those discussions or is this a bit of window dressing from Defra to make it look as though things are happening?

Ms Reid: As far as the Rural Commission is concerned, they seem to have run into the sand; the pathfinders have disappeared. They did some interesting things, there were some interesting conclusions, but they have not been taken far.

Mr Annibal: I think they are still meeting informally as a group within local government.

Q89 Mr Drew: Who is on this?

Mr Annibal: They were chosen as part of the Modernising Rural Delivery devolution of funding and there was one for each region. This was in the era when the rural affairs bit of Defra was slightly larger but the good thing about them is they were set up specifically to look at innovation in the delivery of rural services. They were given a modest budget each which enabled them to take forward one or two initiatives. I know the one for Yorkshire and Humberside, East Riding, looked at the scope to address challenges around service provision through the development of social enterprises and looking at how you could put out a public service market for social enterprises around health and learning outcomes in East Riding because that is transferable to other places potentially. I know there was an environmental agenda in the South West based around the Dorset pathfinder. The pathfinder in the North West, which was Lancashire, looked at co-ordinating activities across different providers of rural services. As a group they established quite a lot of best practice. The original idea was that Defra would have some funds to continue to sustain the dissemination of that best practice but unfortunately that money has not been forthcoming. What they have committed to do as a group is to continue networking so they can at least continue to share their best practice more broadly. Obviously when you do something on a voluntary basis and as a local government group rather than as part and parcel of dialogue with the government department, it is less powerful.

Ms Reid: Or indeed dialogue with the rest of local government, because if they are retaining their expertise within the nine pathfinders then it is not trickling out to the rest of local government.

Mr Annibal: There would be scope to broaden that if there was some support for them to do it. They have done some really quite interesting things and it would be a shame if it all just fizzled out.

Q90 Chairman: You have been very good in sketching out what I call the linguistic description of policy, but to bring it down to some practicalities would I be right in assuming that everything you have said so far leads me to believe that the new target which Defra has is more favourable to you that PSA4 was?

Ms Reid: We discussed this in advance and we agreed in general, yes.

Q91 Chairman: I am glad I drew that conclusion correctly. Let us move on to resources and delivery mechanisms and try to bring it down to some of the practicalities that we are dealing with. You have been very strong in your description, up to now, that you have a lot of data. You can look spatially at areas and you can work with other local authorities to look at programmes and ideas to solve problems. I want to get an example. In your original evidence you told the Committee that within the mix of bodies who have responsibility for rural economies, local government mobilises about 78 per cent of total spending, Learning and Skills holding 18 per cent of relevant budgets, and RDAs 4 per cent. What actually have you got by way of resources that you can deploy to deal with the challenges you have identified in your earlier evidence?

Ms Reid: If you look at a county council, its resources are in many millions. Economic development has always gone on in local authorities but how far it went on rather depended on the drive of the chief executive or the drive of the economic development officer. Now it has become a duty, there is a very significant shift in attitude to it and it has climbed up the agenda very significantly. I am also on the South West and the RDAs are perceived as having lots of money but it is local government that has the money.

Q92 Chairman: The ministers will hear that and come back and take it away from you because every time local authority witnesses come before us they never have enough money for anything.

Ms Reid: If you look at the total budget it can be adjusted.

Q93 Chairman: Give me a for instance. Obviously, in terms of rural communities, the basic infrastructure, the schools, the highways, the planning policies, are all in the gift of local authorities but what else?

Mr Allen: It is important to be clear that if you take a very narrow GVA view of what economic success looks like the levers available to local government are very modest. They are quiet important, because the planning system is one lever by which you can aid that process, but if you take a view of economic development as being about community well-being then the resources that local government wields, including the infrastructure of education, including the broader service infrastructure and transport, that becomes quite significant and of course the role of local government, particularly in the remoter or more isolated rural areas, as a key employer. That, in itself, is a key driver of economic development.

Mr Annibal: It is the tax-raising powers and the ability to make democratic decisions which can sometimes enable local authorities to make a unique difference. If, in my own backyard, we take the example of Mapplethorpe, that is a settlement of 6,000 hard by the Lincolnshire coast which lost its way when it lost its railway line and has deteriorated significantly over three generations to the point where it is a desperately poor place with a secondary school with only 400 pupils and a significant process of people selling their houses in Nottingham, Leicester and Derby and moving into unsustainable caravan-type environments where they will try and live all year round if they can. The council has put together a very extensive suite of policies to try and address some of those issues on a bespoke unique basis. For example, in the face of considerable challenge around small schools policy it has been determined to maintain the viability of that school which in a lot of the other cases may have closed. It has just invested �100,000 working with the government office and the RDA to put together a sub-regional flood strategy specifically to look at the issues to do with rapid inundation, and the threat of it, which is blighting the settlement's long-term future. It has put together an innovative health campaign to look at issues about how you engage with the elderly living in caravans that are not registered because they do not want you to know they are living there all year round. That is a little microcosm but there are a number of interventions in one place there where local government, being relatively close to the ground and having the ability to differentially make investments and also to reflect the democratic needs of a place, is uniquely placed to bring to a rural agenda.

Q94 Chairman: Can you explain to me how the mechanism of Local Area Agreements actually operates? I am trying, in an area where I am not an expert, to understand how the different players relate one to another. If we start at the top, let me ask a simple question: where do you think the control lies on the delivery mechanisms to achieve the new DSO. Do they lie with Defra or do they lie with the partners in the sub-regional area? In explaining to me how Local Area Agreements operate, you might be able to explain how the wiring works between all the different players. We are going to have the Regional Development Agencies as our next set of witnesses but they seem increasingly, from what you were saying at the beginning of your evidence, to be taking a very important strategic view of bringing together both spacial and economic planning together so they seem to sit above you. Help me to become less confused about the architecture.

Ms Reid: The RDA cannot deliver that without working very closely with local authorities. There has to be agreement from local authorities, and local authorities also have to prove themselves competent to deliver in order to have the RDA invest in them.

Mr Annibal: There is a process within the implementation of local area agreements where you agree a lead for each aspect of the work, and that tends to be based, through the process of negotiation, on which organisation is deemed to be the most effective to take forward a particular issue. In agreeing to tackle the core of 35 targets as the priorities, local authorities have very often said we will not seek to work across the whole of Lincolnshire to address this issue, we know there are five or six hot spots where actually tackling low skills will be resolved. Therefore, in that case, a bespoke partnership arises, led by the local authority with the support of the LSC and Business Link, which focuses on those particular places. It is very early days with the LAA but where LAA's work well, and what ought to emerge, is a process whereby people understand how each of those different projects to deliver the 34 targets aggregate up to something which is more holistic and meaningful about the future of a place. That is where the challenge is at the moment. The targets are quite top down in the way they are put together so there is a bit of disconnect between what we might see as our local authorities' targets and these centrally received targets. That is not to say it is not a good idea to have a more structured approach to how people deliver things, but I am not sure at the moment if we are dancing very much we are probably treading on each other's feet in terms of the relationship between the targets and what needs to be done locally.

Mr Allen: What you describe is one of the challenges in terms of successful economic growth but, in fact, the levers do not rest in any one place but many different places and the challenge is to draw them together, as Ivan has described, into something that is locally coherent and meaningful for that community or that place. In its pure form that is what the LAA is supposed to be and do. I think that is a learning exercise that we are all going through and which councils are certainly going through. One thing that is worth registering is that the LAA process is linked to a comprehensive area assessment process. Actually in some ways some of the things you have raised will be reflected in that appraisal process because the council's performance will be judged on its success, not just in terms of what it does with its own resources but how it manages to bring the organisations and the public sector, and the private sector in some cases, together into something that makes coherence and sense to the place and the community. The council's performance will be assessed on that basis. That will challenge because it will actually draw all sorts of institutions together and needs to drive institutions to come together.

Ms Reid: In most local authorities with LAAs there is an economic partnership which has been established to deliver the mechanisms, and that will consist of representatives from each of the local authorities, but most significantly representatives from the local businesses from, in some cases, the trades unions, from the Learning and Skills Council and from Business Link. They will meet together with the economic targets which have been decided upon by the board as a whole and work with the RDA, who will also be a member of the economic partnership, to monitor, advise, work with, research and help deliver the economic development. It is not just local authorities working in isolation but is them working with their communities.

Mr Annibal: An important point to say about LAAs is that partnerships existed before LAAs and will exist afterwards so whilst they are very important at the moment and a key focus there is a lot of good work going on which will not necessarily be subsumed within LAAs but will continue to make a contribution. Certainly in terms of the research we did for the LGA, it seemed clear to us that in those places where organic partnerships have arisen, and people have actually seen a problem and wanted to work together to address it, partnerships are a lot stronger perhaps, in some cases, than they are around LAAs. If you look at the partnership for urban South Hampshire, there was a clear view about the relationship between Southampton, Portsmouth and the adjoining rural authorities which has now taken on the status of an MAA and that has been getting together for seven years. I think it will ultimately stay longer and achieve more. I am not knocking LAAs but they are very much a top down deterministic process for how regeneration takes place. We need to appreciate that there are other things going on which are equally important.

Q95 Chairman: In a way that we are inevitably talking in generalities - and I am not saying that in a way to be critical of what you have said - the feeling I get is that here we have a new Departmental Strategic Objective, we have Local Area Agreements in their early stages, we have new architecture being defined about spatial and economic planning coming together and, therefore, it is quite difficult to talk about outcomes when you are still gathering the information for what the input is. The other impression I get is there is still a lot of top down, and you are basically saying - and I noticed in your evidence you used the term - "there is also a need for greater support for the innovation nested in communities". That says to me there are things happening on the ground that we need to support. It would be very helpful if we might ask you, in the light of our exchanges, to pool together a few examples of real good practice which you have seen working in different authorities in different models around the country which might lend themselves to being adapted to the new architecture, the new DSO, and which give an indication of things that have basically worked. Somebody has looked at the challenges, community well-being, economic skills, and said this is what we will do on the ground to fix that problem. We would find it extremely helpful to have those practical examples.

Ms Reid: How early do you want it?

Chairman: At your earliest convenience in the next two or three weeks, if that is not asking too much. We thank you very much for what you have given us. We are going to get out of the Westminster bubble and see for ourselves in Yorkshire some life on the ground which may give us a better feel, together with your practical evidence. We might want to come back to you when we have got ourselves into this and ask some further questions. Thank you for your oral comments and your written evidence.

Mr David Marlow, Chief Executive, East of England Development Agency and Ms Fiona Bryant, Head of Rural & Sustainable Development, EEDA, gave evidence.

Q96 Chairman: Can I formally welcome you, Mr David Marlow, the Chief Executive of the East of England Development Agency, who is supported by Fiona Bryant, the head of Rural and Sustainable Development from the same agency. I gather you are the lead RDA on rural matters.

Mr Marlow: For my sins, yes.

Q97 Chairman: I saw Mr Steve Broomhead on the train coming down this morning who seemed to get very excited when I told him we were talking to his colleagues about this. He immediately offered to tell me all about what he was doing in the North West so I am sure, in due course, I will learn something. I ask a question about how you see the total financial resources that are available for the development of England's rural economy. I was struck by some of the background briefing that we had when you see that the budget for the rural development programme is �3.9 billion. Then you realise that is over five years, you divide it by the nine RDAs and very quickly it shrinks back to a relatively small sum of money per RDA per year. What is your overall view of RDAs now that you are one of the key economic delivery mechanisms on behalf of Defra for the development of the rural economies as to whether they have the resourcing right?

Mr Marlow: Thank you very much for inviting us and for the question. I was really interested in the discussion you were having with our colleagues from local government just before we came in. The first thing to say, which echoes very much what the local government colleagues said, is that the single pot for the RDA is just over �2 million, and although it sounds a lot of money actually in many regions it amounts to a tiny amount of regionally identifiable public expenditure. If I give the example of my region, my RDA has a budget this year of about �130 million which compares to a local government budget of �9 billion to �10 billion and an overall public spend of about �32 billion, so we are 0.4 per cent of regionally identifiable public expenditure. Our approach, therefore, in terms of stimulating rural economic development, is wherever possible to mainstream it with our main programmes, whether that is business support or innovation and knowledge transfer, improving quality of place and sustainable communities or indeed tackling deprivation. Within that overall approach, where we apply almost everything on a mainstream basis, there are sometimes good rationales for having specific rural programmes, or we are asked by governments to actually administer a specific rural programme as in the example of the socio-economic strands of the Rural Development Programme for England. That is a European programme and that is in addition to our other responsibilities. This may well have been in our evidence but we did some work where, although the Defra contribution to the RDA single pot amounts to about 3.5 per cent of the pot, about 30 per cent of our actual outputs are delivered in the rural areas in the English regions economy. It is a rather long answer to your question. I do not think there is a right answer to this. Clearly one would always want more resources but in terms of an overall approach, if one looks at the economic analysis, whilst there is a case sometimes for small targeted rural specific interventions, the future growth and development sustainably of our rural economies relies largely on a mainstream approach from RDAs and other public bodies like the local authorities and others.

Q98 Chairman: Does that mean the distinction between rural and urban is perhaps slightly redundant?

Mr Marlow: I think that is right. Certainly in my, and the RDA's, relationship with Defra we are continually having this dialogue about definition of rural. On the train coming down here I was thinking about some of our rural districts which are in the local authority districts with the highest proportion of rural populations, what Defra calls the LAD 80s. If you take one of my districts, which is Suffolk Coastal, an LAD 80 district so a predominantly rural district with over 80 per cent of the population in rural settlements, that district has within it an industrial estate which has BT's research centre and is actually the largest ICT business park in Europe. It has within it Sizewell, a major nuclear centre. It has within it Felixstowe port which is our largest container port for Far Eastern imports and exports and it has, for example, Aldeburgh which is a world brand in performing arts. When you have a district like that, adjacent in some parts to Ipswich, a major regional city, you do have to think quite carefully about what it means to be defined as a predominantly rural district.

Q99 Chairman: That is perfectly true, but does that help us to answer the question of what a modern rural economy should look like?

Mr Marlow: I think it does. It has a lot to do with developing niche specialisms which can be, in that particular case, of international, national, regional or sub-regional significance, having a very strong relationship with urban centres, whether they are relatively nearby in the Ipswich case or a market town or whether it is a major metropolitan area as in your region and Yorkshire and the Humber. It is about having the type of public and private leadership that can actually make the most of those assets for the benefits of urban and rural populations.

Q100 Chairman: Do you have much to do with the Commission for Rural Communities? I appreciate it has not been in post for a very long but is it something which you interrelate with? Have you formed a view, at this stage, as to how its watchdog activities on rural affairs are being conducted?

Mr Marlow: I will start off and I will bring Fiona in who has much more day-to-day contact. At a senior level we do have very good relations with Stuart and Graham and the team at the CRC. They play a very important role. Actually, in some senses, it is increasingly important given the changes in Defra and some of the changes of focus there. Certainly we would like to believe that we are building common understandings and a relationship which allows both of us to do our jobs well.

Ms Bryant: I think they have had to go undergo quite a few changes since their development. They did start with three particular regional offices that were looking to work between the nine regions. That has since changed which has meant we have had to retrench and rebuild relationships at the national level, which are generally very good. Where we feel we would still like to build on that is in getting earlier engagement with them on some of the activity they are taking forward, which is just beginning to happen, and perhaps in looking at particular projects. We are doing some work with them on migrant workers which again is leading for the RDAs. Generally our relationships with them are good. We can act for them as a regional conduit by providing them with the contacts into some of the evidence base they are looking for in the regions.

Q101 Mr Drew: In the good old days each RDA had one of its board assigned rural responsibilities. Is that still the case?

Mr Marlow: Yes, I think that is correct. It is certainly true in our RDA. One member of each RDA board is meant to have a specialist focus on the rural economy although, of course, many board members do take an interest but there is a specific board member. It is interesting you say the good old days because it was only 1999.

Ms Bryant: There is still a board member, as David says. What we do for EEDA in our lead role is once a year we bring all the board members together.

Q102 Mr Drew: If there is such a person, do they meet collectively from time to time to look at common perspectives and does anything come out of those meetings? Is there a formal agenda? Is there a strategy, a position paper, and someone says to look at the east of the country, that is very different from the south west?

Ms Bryant: We have a number of things that tend to happen during the meetings. There are particular themes we tend to focus on. Some of those will be because the topics are very current, so this year in January when we met we had a focus on Sub-national Review. We tend to have a focus on some themes other than that we particularly want to look at. We were looking at issues like access to services this year as well. Then we have a round the table where all the regions have a chance to discuss what they have been doing, the issues that have happened, and we get an outside guest as well.

Q103 Mr Drew: Do those discussions look at issues to do with city regions? Is there a common approach between RDAs on whether city regions are a good idea? Does that relate to every RDA region or how is this perceived?

Mr Marlow: Certainly it is the case that RDAs have spoken collectively, and obviously sometimes in smaller groups, about city regions and indeed rural economy positioning vis-a-vis city regions. There are actually significant differences across the network, not in terms of whether city regions are a good idea or not; we all accept that our cities are major drivers of the regional economy. My point about sub-groups of RDAs perhaps working collectively from slightly different vantage points is if you took something like the Northern Way, which is a collective of the North East, North West and Yorkshire and Humber economies, they have large metropolitan cities and city regions which are based around them which have a different relationship to the regional economy and the rural economy than, for example, if you take us at the South East and the South West. We would have more small and medium size cities which are indeed drivers of our regional economies but would have a different relationship to market towns, rural communities, the food-based sectors, tourism and so on. There is a general consensus that city regions are major drivers of regional economies and that the relationship of the city regions to their rural hinterlands is absolutely vital for the well-being of those rural economies but there is a differential relationship depending on the type of region you are talking about.

Q104 Mr Drew: The new kids on the block, the Commission for Rural Communities, how would they relate to RDAs either currently or in the future? Do you have contact with them? Is it something that comes up? It is a new body and in a sense it is replacing the Countryside Agency but how would that relate to discussions at the rural RDA representatives.

Mr Marlow: We have said we are developing good relationships with the CRC at both senior and operational level. We are trying to do joint projects. We have meetings at chairman and chief executive level quite frequently and we have a growing closeness and recognition of each other's roles.

Ms Bryant: Graham and Stuart came to talk to our board members when we got them together.

Q105 Chairman: In paragraph 28 of your evidence there is a wonderful sentence which says: "There exists a generally good relationship between RDAs and Defra where honest opinions are shared." That is usually shorthand for the fact you do not always get on all that well and there is a bit of plain speaking. What is the RDA relationship with Defra? How is it conducted and, given our previous witnesses' observations about what they saw as the importance of rural affairs within the Defra hierarchy, what is your view about how important it is?

Mr Marlow: The relationship is frank and is something that both parties need to work on continuously. Defra is in a very interesting position in government. Defra is a bit like the RDA in terms of Defra's relationship to government and the RDA's relationship to the regional economy. The 0.4 per cent argument that I gave you at beginning of my presentation is not totally dissimilar. I have to do as much influencing as I can of other public sector spenders, the 99.6 per cent of public spend in the east of England, if we are going to get the most bangs for our bucks in terms of the East of England economy. Defra's position with government is very similar. They are a relatively modest spending department and in some senses, if they are going to champion rural growth, rural development, rural well-being, they have to influence other parts of government at quite a sophisticated persuasive level. I think the honest position in terms of the Defra relationship with RDAs, and arguably with some other bodies, is that the influence has sometimes with the RDA been much too much on quite a formalistic view: we give 72 million, or 50 million or whatever it is, to the RDA single pot, what are we getting for that investment. As I said, it is 3.5 per cent and they get about 30 per cent of our output in rural areas. The dialogue ought to be at a much more sophisticated level: how does Defra actually influence business support in the round; how does Defra actually influence the Sub-national playing out of housing growth in both urban and rural areas, sustainable development, knowledge transfer from universities to small enterprises in key sectors which are important for the rural economy, in tackling deprivation from the big spenders like local government, Job Centre Plus and so on. We need to constantly refresh our dialogue and relationship with Defra, a strategic dialogue as well as an operational dialogue which is very transactional in character in terms of what do we get for our �70 million.

Q106 Chairman: The question I get from that observation is you think Defra perhaps should be doing better within government to get the kind of reaction from other players which you identify but which I sense you do not see actually happening on the ground?

Mr Marlow: There needs to be as much effort put into strategic dialogue and working with the RDAs on that strategic dialogue. Certainly if you look at Defra's targets and DSO and so on, we share those objectives really at the core of what we are trying to do in our regional economies. If we are going to see both parties fully effective, we need a strategic dialogue both between ourselves and with other parts of the public sector to deliver the best outcome for rural communities.

Q107 Chairman: If you share in perfect harmony the objective of Defra, could you tell us what a strong rural economy is from your standpoint?

Mr Marlow: I tried to provide some early hints: it is diversified; it does have niche specialisms which have economic impact well beyond the rural community in which it is located; it engages local people and their skills, energies and talents; it provides a range of opportunities; it is well designed and well connected to its urban centres of varying kinds; and it is articulating demand for public service and the types of public services that can help it grow and develop.

Q108 Chairman: As a group of RDAs, were you asked, before Defra came out with the new DSO, what it should be to make some input?

Mr Marlow: It is fair to say we did not feel particularly engaged.

Q109 Chairman: Your short answer is no.

Mr Marlow: Yes.

Q110 Chairman: You have given your version of strong rural communities. Should Defra try to do that? It sits there on a piece of paper and there are lots of things about intermediate outcomes and measurement but you are still left scratching around thinking quite what does the department mean by this.

Mr Marlow: It is really difficult to always codify a concept into something which is measurable although I think it is really important that we can measure what we are trying to achieve. I certainly think in terms of capturing hearts and minds of the kind that I have said, across the public sector and indeed across the business and third sectors as well, there needs to be an image of a strong community which captures hearts and minds as well as providing a stimulus for measuring outcomes.

Q111 Dr Strang: Where there is a lot of unemployment and poverty that would be a weak rural community so in a sense where there are higher levels of employment that is a strong community.

Mr Marlow: Absolutely.

Q112 Dr Strang: On this change from the PSA4, which in your written submissions you described as a blunt instrument, what difference do you see this making changing over from that to the Departmental Strategic Objectives? Do you see this as meaning that the impact is different? You said you were not consulted about the change but since they came out with the DSO have they spoken to you about it?

Mr Marlow: The answer to the last part is clearly we do speak about the Departmental Strategic Objectives. From my point of view, and the RDA point of view, all of these things are about setting out how you do your business. Potentially the DSO has a richness which is stronger than PSA4 was in terms of, for example, some of the intermediate outputs and outcomes being able to influence Local Area Agreements, measures of well-being and so on, in a way that perhaps PSA4 needed a bigger stretch of the leap of imagination to do that. I am with the previous local authority speakers: it is an improvement. They are now talking to us about how it would play out. Defra are attempting to engage in things like Local Area Agreements to add that rural richness to the outcomes and the outputs that are being measured.

Ms Bryant: I would agree with that to a certain extent. It is an issue, and the LGA were mentioning this. It would be nice, in an ideal world, if all departments actually followed through and demonstrated measurable outcomes in rural areas with their mainstream policies as they do in urban areas. Whilst that clearly is still not the case as ideally as it should be, it is important to have something that pushes. The fact that it has changed from being a PSA to a DSO does impact on that. In concentrating on the 12 least performing areas, it does not recognise the full changes in the economies in rural areas that have happened. I know Tim and Ivan were pointing out it does not recognise the interdependence. It does not recognise the high level contributions that David has already pointed out that some rural areas are making to the urban hinterlands or the interdependencies of it. Finally, I would say that it is unfortunate that it is a Defra departmental DSO. Most levers are going to be delivered through other departmental driven activity and, therefore, again to follow up it is unfortunate that it is trying to be pushed from one department across the rest without the strength of the delivery.

Q113 Chairman: You made that point in your revised re-focused evidence in paragraph 2.2. The impression I got was because of this focusing, as you were saying, on the lowest levels of performance you are almost suggesting that if resources chase that objective then you are not going to get as big a bang for your buck because people are not recognising the other potential. In fact, you talk about those measures not looking at things like the potential for self-employment and entrepreneurship found in rural areas. It is a bit concerning if you, as people who work in an area of objective economic assessment, are saying to Defra that one of the measures of success you have chosen will not necessarily maximise the potential benefit from the resource that goes into the rural economy. Do you not think it a bit worrying they had not reached that conclusion?

Mr Marlow: I think clearly there is always a political value judgment to be made, either at national or local authority level, about the extent to which you invest in success with public resources and the extent to which you tackle deprivation. Remember we are bodies set up to actually improve the regional economy and meet regional growth objectives and so on. If the focus on rural economic development is solely on the tackling deprivation issue, one misses a lot of opportunities for growth and development in adjacent rural areas which may have national or regional economic impact, which may be very well connected to the adjacent area if you get things like the skills and the transport right and which do have merit in being part of Defra's overall view on growing the rural economy. I will go back to the example I gave you of the BT industrial park, the Sizewells and the Aldeburghs and the Felixstowes of this world who have quite a profound impact on Tendring, which is just across the estuary, and one of the most deprived rural districts in the country. It comes to the point of rural definitions and so on.

Q114 Chairman: One of the other issues that we were discussing earlier was the ability to follow economic zones as opposed to administrative boundaries. The message you have said to me is, taking the three examples you have given, those three enterprises if they are properly invested in could have a greater effect on building the strong community, by definition, because people will move from the rural to these nodal points of economic activity for employment reasons and, therefore, the well-being of the community would benefit. Sometimes you get the impression that what we are talking about is lots of little bits of economic activity scattered around rather than these inter-relationships which you described in your evidence.

Mr Marlow: I think that is right. In the example I have given those three centres are relatively close to each other. What it points out is, in a sense, the spurious character of rural and urban interventions except in very specific cases of acute rural stress or rural deprivation. It is quite legitimate, if we are looking to grow the national and the regional economy and to ensure rural communities benefit from that, for the public sector to do interventions which, for example, do grow the access of communities to the economic opportunities of an industrial park or a Felixstowe or a Sizewell in due course. They are actually neither urban nor rural interventions in their own right but one would need to make sure that issues like skills, enterprise or transport did accommodate the rural communities that are adjacent to those centres.

Q115 Chairman: You make an interesting point in your re-focused evidence in paragraph 3.3 where you say: "Whilst we appreciate, however, that Defra's decision to restructure and focus on their two PSAs (effectively reducing their explicit commitment to rural affairs within their agenda and reducing their rural team resources by half) ..." That is quite a criticism on the department that they are perhaps not putting as much resources as you think they ought to into rural affairs and almost saying they are not taking that responsibility quite as seriously as they did. Is that your perception of where Defra stand?

Mr Marlow: I think it was a legitimate judgment to make by Defra to focus on sustainable development, climate change, and so on, and, like the RDAs and like local government in a way, to seek whenever possible to mainstream rural priority concerns.

Q116 Chairman: You then go on to say: "... and therefore, there is still a substantive gap in the explicit rural proofing coverage of key Whitehall departments." If you have less bodies in Defra to do the chasing up, being kicked generally by the CRC, one sees the rural dimension fading away a bit in central government.

Mr Marlow: That is a legitimate point but it comes back to the point I was making earlier about Defra having to be extremely skilful and sophisticated in the way it influences other government departments and that might not always be through someone who is rural banging CLG or DWP's head against a brick wall; it is about understanding the new way of looking at rural and urban intervention. There is also a point about other departments being much smarter about rural proofing.

Q117 Chairman: Can I get your comment on this sentence: "Our evidence shows that the commitment to rural proofing policy is not being delivered consistently or systematically across departments or policy areas."

Ms Bryant: That was the CRC's evidence and we were just quoting it. We were quoting their report.

Q118 Chairman: I am assuming that you endorse what they say otherwise you would not have put it in.

Ms Bryant: We do endorse that. David is obviously right that Defra have chosen to focus now on two of the PSAs that are seen as very high priority across government and focus their resources on pushing those agenda across government. In principle they feel that the requirements for rural proofing of all policies have been set. The timing, however, is such that reducing their resources to such an extent when, according to the CRC at least, rural proofing is not happening as well as it should, which we would agree with, is perhaps unfortunate. On the other hand, should Defra have the responsibility of rural proofing across government or should we be pushing for all departments to show measurable outcomes a lot more explicitly than they have done so far through being driven by Cabinet Office and/or Treasury?

Q119 Chairman: That is a good question for us to reflect on when we come to write our report. In your evidence you told us that specific rural intervention should only be developed when market failure cannot be addressed by mainstream provision. Can you try and help me to understand what that actually means and perhaps give an example of an instance where a specific rural intervention might be necessary? At the beginning you were talking about using your mainstream policies to benefit rural economies and communities in equal measure as you would urban challenges.

Mr Marlow: One example where we went through a process of having a specific rural initiative, and then having learnt rural demand and needs we mainstreamed it, is the Business Link network. When the RDAs took it over we set up a specific rural gateway to enable rural businesses to access publicly funded business support. Having actually done that for a couple of years our new contracts were able to mainstream the business support service through having special rural advisers within the mainstream Business Link as opposed to having a specific parallel service. That type of process is probably quite a good illustration of how you can learn how to better meet rural demand and rural priorities as a precursor to providing a mainstream service. There are some other examples where we could argue similarly.

Ms Bryant: It follows the economic geographies' argument that actually rural is a spatial concept and for most of the issues and interventions that we are needing to address, whether they are around skills or transport, there is a call for mainstream policy to address those in rural areas as much as urban. Indeed, I would suggest that the work the RDAs have done has meant that we have increased the value of the benefits to rural development we have delivered through our outputs rather than being driven by the actual funding that was driven in asking us to do that. You do occasionally need specific interventions which can be for different reasons. For example, in our region we are trying to ensure that the agricultural industry and the food processing industry benefits, as far as possible, from mainstream support, and certainly through the Business Link, through leadership advice and support we would do that. There are certain areas where, as the driest region, we do a lot of work on water resources, but there are particular issues for agriculture around water resources. We have put together a programme with Cranfield, with the NFU, with the CLA and the UK Irrigation Association to look at some work on maximising the efficiency of water resource use and abstraction within agricultural and pulling together some groups on the back of that. We did actually look at it around those bases. There are also issues around the recognition of entrepreneurship and the stimulation of that in rural communities where sometimes you just need some additional drivers to actually get the motivation and stimulation going. Certainly in the North West they fund a particular strength in rural communities which is around that capacity building arena within the constraints of the access and the timescales that people in rural communities have.

Q120 Chairman: We have talked about the potential for the rural economy as the focus of our work. I wondered if anybody had done any economic work which you have seen which attempts to quantify what that potential might be. One of the things that have come through already is that agriculture clearly in some areas is very, very important. If you take the total non-urban economic activity, agriculture is now quite a small part. Your own examples of things that go on outwith of the urban area emphasises the point very well. An awful lot of non-traditional economic activity is taking place in a definable rural environment. Has anybody done any work, therefore, to say if you put X in we might get Y out in terms of what the rural economy could delivery?

Mr Marlow: There are lots of studies of individual locations and individual economies, and perhaps that is something that we could get our intelligence people to point you in the direction of in terms of evidence. Can we come back to you on that?

Ms Bryant: In the North West they have done a study which has evaluated that most of the value in the economy in rural areas rather than in rural economies is coming increasingly from things like services, public sector and hospitality. About 23 per cent of their GVA in the North West comes out of those rural areas and they have built on that to demonstrate the contribution of the rural areas to their urban hinterlands.

Q121 Chairman: One of the interesting features of the evidence we have had is that economic growth seems to be quicker. Percentages are always dangerous, particularly if you are starting from a low base, but from the traditional picture of the sort of sleepy rural ideal the impression I get is that things are more active, interesting and innovative in the rural economy, therefore you could be making quite a strong argument about stimulating it because the potential gains are quite considerable.

Mr Marlow: That is entirely right but it also comes back to where we started in terms of whether rural/urban is an outmoded dichotomy. A lot of the innovation, a lot of the growth, in rural economies, certainly in the examples that we have looked at, has been significantly influenced by out-migration from the urban areas and individuals and businesses making lifestyle decisions, perhaps doing some telecommuting or distance working and then creating a stimulus for service industries in the rural economy. The remaining concentrations of deprivation are often from the indigenous long-standing communities who might have lower skills, a lower culture of ambition and so on. It is actually quite an interrelated economic system but you are quite right that all the evidence is that actually, albeit from a modest base, rates of growth, rates of innovation and rates of business start-up and so on are higher in rural areas than in urban areas in the round.

Q122 Chairman: The Sub-regional Reviews, the bringing together of what you do and what the Regional Assemblies do, in your judgment what difference is that going to make towards the fulfilment of the Defra DSO?

Mr Marlow: The bringing together of the spatial and the economic strategies into one document and having one process for consultation, development and formulation is actually a potential very powerful driver, taking an holistic approach to both urban and rural development. I also think the mechanisms for delivery that sit behind the proposed single regional strategy of increased regional funding allocation rounds, Local Area Agreements, multi-area agreements sub-regionally again provide potential integration mechanisms to actually benefit both urban and rural development and allow that more sophisticated approach to growth and development to move forward. I would finish with one of my earlier comments and that is that places requirements on Defra to have quite a different sophistication of engagement sub-nationally with RDAs, local authorities and other partners to really make the most of those opportunities.

Chairman: Thank you very much indeed. We are feeling our way into this subject. There are two things perhaps I might say in conclusion: first of all, thank you very much for agreeing to have a look and see if there is some economic work that has been done that might quantify what the potential is. We have talked in policy terms but if there are any examples of good practice which exemplify the points you are making about the application of mainstreaming policies but in a rural environment that have a good effect, and other good examples of what RDAs have done to help stimulate the economy, we would be grateful for having that further information. Thank you for your oral and your two parts of written evidence.