01

North East LEP AreaEuropean Structural and Investment Fund Strategy 2014 - 2020

Together we will create more and better jobs through smart, sustainable and inclusive growth.

November 2015

02

Welcome

The North East Economy – key facts

The North East is...

Our strengths and weaknesses

The North East Local Enterprise Partnership area - our plan for growth

European Structural and Investment Funding - helping to deliver our plan for growth

ESIF Allocations Split by Theme

European Structural and Investment Funding in the North East LEP area - in summary

European Social Funding in The North East LEP area - in summary

European Agricultural Fund for Rural Development in the North East - in summary

Governance

Working in Partnership

03

04

05

06

07

08

09

10

11

12

13

14

Contents Page

03

Today the North East Local Enterprise Partnership (North East LEP) area has a globally competitive economy. It is home to nearly two million people and contributed £34 billion to the UK economy in 2013.

Following the UK recession the North East LEP area has demonstrated high potential for growth, hitting record employment rates for the region and having more people employed than ever before. Productivity has been growing at one of the fastest rates across the country, with the North East LEP area ranked fourth for GVA per head in 2013.

It is our existing and emerging industries which set us out from the crowd and create the conditions for growth.

Our existing strengths lie in advanced manufacturing, our high quality healthcare system and technologies (such as virtual reality, electric vehicles and advanced materials), pharmaceuticals, energy, low carbon and renewable technologies, logistics, professional services, forestry and tourism – all of which are showing promising signs of growth. Our first class further and higher education system underpins these strengths.

The North East is also emerging as a potential global leader in a number of new and emerging industries. As a world leader in passenger vehicle manufacture, the North East will provide a cleaner, greener future for all.

We are also known for having one of the fastest growing creative, digital, software and technology communities in UK; thriving subsea and offshore sectors; as well as a globally significant presence in the health and life science sectors. Other areas of opportunity include surface science, ageing, satellite technologies and energy networks.

Indeed, the North East has an excellent basis from which to grow and create more and better jobs.

That is not to say that we do not face challenges to growth. The demand side challenge is that we need more businesses in the North East. We can achieve this through a combination of higher numbers of business start- ups; greater survival rates, growth of established businesses and more businesses relocating to the area. We want our businesses to be competitive, to innovate and to export their goods and services to the rest of the UK and beyond. Investment in research and development will certainly support these goals; collectively this will create more and better private sector jobs for the North East.

Our supply side challenge is to ensure that local people have the right skills for growth and to meet business needs. We need to work closely with businesses, schools, colleges, universities and training providers to ensure our young people are fully aware of future job opportunities and are guided to the appropriate training. We are working with partners and with businesses to support programmes that are inclusive and which up-skill and re-skill those who are of working age and looking for work so that they too can find jobs that meet employer demand. Matching supply and demand is central to achieving an effective labour market.

We have worked with our partners to establish our plan for growth - the North East Strategic Economic Plan - and we are working together in partnership to support businesses and our local communities to deliver this plan.

Our job now is to make the most of the opportunity brought about by European funding, maximising

the opportunity to create the right environment for smart, sustainable and inclusive growth that will lead to more and better jobs. The key strategic themes of our overarching Strategic Economic Plan- innovation, business growth, skills, employability and inclusion, and transport and digital connectivity- align neatly with European objectives on smart, sustainable and inclusive growth; and the skills and inclusion interventions will help connect people to these opportunities.

I would like to thank everyone who has been involved so far, including those who took part in the public consultation on our draft strategy in 2014. Moving forwards, the North East European Structural and Investment Fund Sub-Committee, which consists of representatives from the public, private and voluntary sectors, will advise and help to steer investments that offer the best opportunity to create jobs and growth.

So whether it is business support, finance, skills gaps or driving innovation, European funding gives us the chance to act and make a real difference.

The North East is a fantastic place in which to live, work and visit. Together we will achieve great things for our area.

Paul Woolston,

North East ESIF Sub-Committee and Local l Enterprise Partnership Chair.

Today the North East is a globally

competitive economy. It is home to

The North East generates

to the UK economy.

04

A68

A68

A1

A1 (M)

A1

A1

A68

A68

A69

A19

A696

A189

A697

A69

A688

A691

A690

A693

A692

Principal Rail Links

Tyne & Wear Metro

LEP Boundary

Motorway

Key Routes

Enterprise Zone

Ports

Airports

Hexham

Consett

Spennymoor

Sedgefield

SeahamChester-le-

Street

BishopAucklund

BarnardCastle

To York,Leed,

London,Midlands

To Carlisle,Manchester

To Edinburgh, Glasgow, Aberdeen

Haltwhistle

RothburyNorthumberland

National Park

Alnwick

Wooler

Holy Island

Berwick-upon-Tweed

FarneIslands

CoquetIsland

Blyth

Blaydon

SUNDERLAND

DURHAM

Wingate

NEWCASTLEUPON TYNE

GATESHEAD

NewcastleAirport

Peterlee

Houghton-le-Spring Easington

CramlingtonWhitley Bay

AshingtonMorpeth

NewtonAycliffeNewtonAycliffe

Washington

SouthShields

Bellingham

NorthShields

Population 1.95 MILLION

312,000 People Economically Inactive

49,230 Enterprises

1.25mWorking Age

370,000Retirement (65 +)

340,000 Young People

(Under 16)

25.2%of Working Age

Population

National Average:22.5%

29%of Working Age

Population

National Average:36%

87% Micro 13% Small/Medium 0.4% Large

(VAT/PAYE Registered)

351,000 People with High Level (Level 4) Skills

11.6% of total workforce jobs in whole of North East

The North East Local Enterprise Area Economy – Key Facts 1

69.9% Aged 16-64 National average: 72.9%

880,000 People Employed

Self Employed Jobs

GVA £34BNGVA per head £17,500

132,000

60% of total private sector business employment

Employed by SME Businesses

350,000 1 All data is based on the latest information available as at October 23rd 2015. Source ONS

05

The North East is ...

...Well connected to national and international markets Through key international gateways and strong rail and road connectivity to the North, South and West. The Port of Tyne and Newcastle International Airport offer passenger and freight connections to global markets Newcastle and Durham rail stations are well-connected through the East Coast Mainline and Cross Country routes.

The ports of Berwick, Blyth, Sunderland and Seaham also provide freight maritime links.

These international and national gateways are particularly important for local export-led sectors.

...Known for its sector strengthsIn advanced manufacturing, healthcare system and technologies (such as virtual reality, electric vehicles and advanced materials), pharmaceuticals, energy, low carbon and renewable technologies, logistics, professional services, forestry and tourism.Our first class further and higher education system underpins these strengths.

...Emerging as a potential global leader in a number of new and emerging industries and is host to world class universities and research institutions The North East has a long history of invention and a pioneering spirit; we led the world in the development of rail passenger travel, engineering and scientific discovery in the Industrial Revolution.

Today the North East has particular advantages that set us out from the crowd; these are referred to as our ‘Smart Specialisation’ areas:

• Through Passenger Vehicle Manufacture with a particular focus on Low Carbon vehicle technology, we are leading the way to provide a cleaner, greener future for all. The North East has taken up the challenge of finding solutions to provide a cleaner, greener future for our transport systems, homes and cities. Cleaner, sustainable travel is one of the planet’s greatest challenges – the North East is ideally placed to meet it. “Our aim is to be a leading test bed and demonstration area for low carbon vehicles; they are transforming the way we live our lives, changing the infrastructure of our cities and our impact on our planet.”

• We have one of the fastest growing creative, digital, software & technology communities in the UK. Creative, digital, software and technology pioneers are spearheading the region’s growing reputation as a hotbed of ideas, entrepreneurial spirit and tech collaboration. “We will foster an environment for businesses to be more efficient and competitive through digital enablement”

• Our subsea ecosystem offers world class engineering & manufacturing. North East pioneers were among the first to recognise the huge commercial potential of subsea technology in the 1970s. We have built on their revolutionary work, creating a ‘family tree’ of new industrial growth across the region. “Today our ability to find innovative solutions gives

us a leading edge in subsea technologies globally and offers fantastic inward investment opportunities.”

• Our globally significant life sciences and healthcare sectors are strong and growing. We produce 33% of the UK’s Gross Domestic Product in pharmaceutical manufacturing and household names such as GlaxoSmithKline, MSD and Piramal Pharma Solutions all choose to call the region home. “A number of our hospitals are globally recognised as centres of healthcare excellence and the region has cemented its position as one of the UK’s leading academic bioscience centres for research, teaching and training.”

• Other areas of opportunity include surface science, ageing, satellite technologies and energy networks.

...A Place that offers opportunities for business growth As well as our emerging sectors we are also seeing growth in business services and professional services and logistics, as well as retail. Furthermore, the strategic road networks including the A1 and A19 corridors, the banks of our industrial rivers and the coast are providing current and future opportunities, especially through the North East Enterprise Zone to provide the necessary physical economic infrastructure to support the growth of these sectors.

...At the forefront of low carbon economic growth We are a premier location for low carbon, sustainable private-

sector led growth. We have a track-record of innovation in energy and manufacturing technologies, a strong research base and valuable natural assets.

...Home to a thriving rural economyOur rural areas are extensive and include the greater part of Durham and Northumberland, with a rural hinterland in parts of Tyne and Wear.

The rural economy has great potential to enhance the area’s wider economic success. Building on its diversity, sector strengths, and its physical, natural and business assets, there is potential for a greater representation from across sectors to grow and for a step-change in productivity.

...A place for great sports, culture and tourism We have two Premier League football teams, a premiership rugby union team, an international Test status cricket ground, an international athletics stadium and world class cultural venues.

In recent years we have hosted the Lindisfarne Gospels Exhibition, the British Science Festival, the Turner Prize and international sporting events such as the Tour of Britain, Olympic Football, World Cup Rugby, Rugby League Magic Weekend and the Ashes, while continuing the success of the Great North Run.

06

Strengths

weaknesses

Threats

Opportunities

Foreign Direct Investment (FDI)Strong performance in attracting FDI and associated jobs compared to other regions. The North East LEP was the second most successful area for FDI in terms of jobs created in 2014/15 (3,105 new and 166 safeguarded jobs).

AttractivenessAttractiveness of area’s lower living costs, increasing real value of wages.

ProductivityCapitalise on existing strength to raise productivity levels around vehicles and offshore energy.

ManufacturingStrong manufacturing expertise, leading to a high proportion of employees in this sector, making up 10% of North East LEP area jobs.

SkillsThe ability to match the supply of skills with business needs.

Enterprise ZoneBenefits for investors for locating in area’s Enterprise Zone area or City Deal/Accelerated Development Zones schemes.

Graduate Retention, Progression and MigrationIncreased numbers of businesses demanding highly skilled labour are required to avoid underemployment and address longer term skills retention and attract inward migration.

Social EconomyGrowth potential in delivering goods and services which have wider social benefits. Open procurement opportunities through the Social Values Act.

Demographic ChangeAn ageing population means that we need more people in work for longer. This has implications for improving the sustainability of employed people in the over 50s age group through improved continued training and reskilling.

InstitutionsReputation of academic and research institutions, innovation assets and networks. Trade Diversification

North East businesses need to build upon their comparative advantage and emerging strengths, expanding into a wider range of international markets to alleviate the impacts of localised economic shocks and increase the region’s economic resilience. This includes increasing trade links within the domestic market.

Cost and ConnectivityCompetitive input/land costs, web connectivity and sectoral strengths for major employers.

Knowledge intensive businessConcentration of knowledge intensive businesses particularly in software technology, electronic, gaming and creative businesses.

TradeStrength in growing export industries and improving access to international markets via the regions ports and new international flight paths.

HousingHousing stock in need of investment to improve availability of quality homes.

ConnectivityInternational and national access via Newcastle International Airport, North Sea ports, High Speed Rail Connections and trunk road network.

AssetsOutstanding natural and developed assets, including UNESCO World Heritage Sites, a National Park, and transport infrastructure.

TradeThe North East is one of the only English regions with a trade surplus (£4.5m), with an increasing share of exports to EU countries (56%).

Enterprise RatesLow enterprise rates and dependency on large and public sector employers as source of employment.

Research and DevelopmentLow investment in research and development activities.

Access to FinanceLack of access to appropriate access to finance and limited supply of investment to Small and Medium Enterprises and social enterprises.

Private SectorUnder represented private sector particular in services such as professional, technical and business administration.

Internal ConnectivityLocalised congestion, weak public transport access to some key employment areas and isolated communities. Public transport affordability, ageing infrastructure and inadequate rail capacity.

External ConnectivityPoor transport links East to West and North to South, restricting access to markets, affecting supply chains and imposing costs on business. These include single carriageway ‘A’ roads, lack of electrification of key rail routes and outdated rolling stock.

SkillsBelow national average skills levels impact negatively upon the North East LEP area’s productivity, growth and wage levels. Only half of the area’s working age population have level four qualifications and above and one in six have up to level one skills. Skills shortages are concentrated in the youngest and oldest working age cohorts of the population.

Employment and InclusionHigh labour market inactivity rates and lower employment rates than the national average, employment rates, driven in part by poor health, entrenched deprivation and a lack of opportunities. Highest level of inactivity in the country at 25%.

Gross Value Added (GVA)In the last three years, the area has been one of the country’s top five performers in GVA per head growth.

To maximise growth opportunities we need to build on our strengths and address our weaknesses

Digital ConnectivityHas been improving but still falling short of some other parts of the UK and Europe. Digital connectivity is required as an enabler of rural growth, self-employment and flexible working. Target of 95% access to superfast broadband by 2017.

07

Business growth & finance“Our goal is to create a world class business support and finance ecosystem that makes a real and measurable difference to business growth, productivity and trade.”

Business growth creates jobs and wealth; the North East benefits from an innovative business environment and a competitive cost base. However, the area has a low business density and reliance on the public sector for employment compared to other parts of the UK. With a clear focus on the survival and growth needs of established small businesses and smart specialisation, we will give our economy greater competitive advantage by enhancing entrepreneurship and enterprising skills, boosting prosperity, productivity and profitability to increase wages and employment.

We will make the North East a place where it is easy to start and grow a business by helping businesspeople find and utilise the right information, expert advice and finance to grow and thrive. We will get more business start-ups, support existing businesses to thrive and grow and to grow more quickly, and attract more new businesses to the area.

Assets & infrastructure ”Our goal is to create sustainable communities, unlock our key employment sites and invest in our local assets.”

The North East has strong links between where people live, work, and visit.

We will invest in our urban centres, our key employment sites, our tourism, cultural and heritage assets and our rivers and green infrastructure to retain our businesses, our workforce and to attract visitors.

Skills ”Our goal is to develop a skilled workforce that is responsive to employer needs.”

A skilled workforce is central to private sector led growth; the area has a strong reputation for responding to the opportunities presented by a growing and changing economy. Indeed, the North East boasts the highest proportion of apprenticeships in the UK.

We need our young people to be fully aware of job opportunities and guide them to appropriate training; we must also up-skill and re-skill those already of working age, creating sustainable employment opportunities for all. We will support a shift in our workforce toward higher level skills attainment, ultimately to ensure we have the right skills to maintain and grow our economy.

Transport & connectivity”Our goal is for the North East to become host to the UK’s fully integrated transport system.”

Improving our transport and digital connectivity links is essential to ensure businesses can strengthen supply chains and achieve access to markets as this will drive investment and grow trade, export, and our ability to compete globally, to allow people access to work and to attract people to visit and stay.

The North East is also leading the way in supporting a modal shift from traditional car usage to electric vehicles and other means of transportation. This will in turn reduce congestion, further driving economic activity. We will continue to secure better links to attract visitors, to enable businesses to increase trade and exports, and get more people to and from jobs

Innovation“Our goal is to take our place as a leading innovation Hot Spot in Europe.”

Innovation is an Engine for Growth; put simply it’s about matching what’s needed with what’s possible to create economic value or social good. Today’s new products, services and processes will drive opportunities to create tomorrow’s new jobs and industries. We will focus on what we are good at, giving our economy greater competitive advantage by driving rapid growth and creating more and better jobs.

The North East has significant innovation strengths; our areas of competitive advantage - also known as smart specialisation - are passenger vehicle manufacture, creative, digital, software & technology , subsea and offshore engineering, and life sciences and healthcare. Other areas of opportunity include surface science, ageing, satellite and energy networks. We will maximise growth opportunities in our smart specialisation areas. We will get more businesses innovating and develop more skilled people to meet business demand.

The North East Local Enterprise Partnership area - our plan for growthWe have worked with our partners to establish our plan for growth - the North East Strategic Economic Plan - and we are working together in partnership to support businesses and our local communities to deliver on this plan. Our aim is to achieve the following:

“By 2024 our economy will provide over one million jobs”

Employment & inclusion ”Our goal is to increase employment, ensuring no one is left behind.”

Employment is the key route to combating poverty and exclusion.

Despite an improving picture in recent years the area has relatively high levels of unemployment and inactivity compared to other areas in across the country; this is particularly the case for young people.

Our older workers who also face skills challenges against a backdrop of longer working lives and ill health.

Our challenge is to maximise employment opportunities for all.

We will overcome barriers to employment by tackling deprivation and addressing the multiple factors that contribute to social exclusion and deprivation.

08

European Structural and Investment funding Helping to deliver our plan for growthOur job now is to take advantage of the opportunity brought about by Europe 2020 and associated European funding, creating the right environment for smart, sustainable and inclusive growth which will lead to more and better jobs – the aim of our Strategic Economic Plan. The key strategic themes of our overarching Strategic Economic Plan align neatly with European objectives on smart, sustainable and inclusive growth.

The European Structural and Investment Funds (ESIF) are the European Union’s main funding programmes supporting jobs and growth across Europe. In the UK these are made up of the European Regional Development Fund (ERDF), European Social Fund (ESF), European Agricultural Fund for Rural Development (EAFRD) and European Maritime and Fisheries Fund (EMFF). Whilst all of the programmes are managed nationally, the Government is keen to ensure this funding is focused on local priorities which align with the Strategic Economic Plans as defined by Local Enterprise Partnerships across England (with the exception of EMFF which is much smaller and is managed nationally).

Consequently the North East LEP area has been given two separate notional allocations for ESIF funding; these allocations are split into two categories:

• Durham has the status of a ‘transition region’ due to its relatively lower economic performance (between 75-90% of the European average GDP); projects can secure up to 60% of ESIF funding 2

• Tyne and Wear and Northumberland are classed as area is classed as ‘more developed’ which means its economic performance is 90% or above the European GDP average; projects in this area can secure up to 50% of ESIF funding

2All projects must be compliant with EU State Aid regulations; therefore this is the maximum allocation that can be secured. Please refer to ESIF State Aid guidance on the GOV website for more details 3 Based on indicative allocations and an exchange rate of £0.71 to EUR 1. Both are subject to change.4 This also includes the Youth Employment Initiative funding for the Durham area

ERDFAims to strengthen economic growth and social cohesion by correcting imbalances between regions.

It focuses its investments on several key areas: innovation and research; the digital agenda; support for small and medium-sized enterprises (SMEs); and the low-carbon economy. ERDF action is designed to reduce economic, environmental and social problems in urban areas, with a special focus on sustainable urban development, through ‘integrated actions’ managed by cities.

EAFRDRural development policy helps rural areas to meet economic, environmental and social challenges and opportunities that face them in the 21st century.

In line with Europe 2020 and the overall Common Agricultural Policy objectives, three long-term strategic objectives for EU rural development policy in the 2014-2020 period can be identified: fostering the competitiveness of agriculture; ensuring the sustainable management of natural resources, and climate action; and achieving a balanced territorial development of rural economies and communities including the creation and maintenance of employment.

ESFAims to help people get better jobs and ensuring fairer job opportunities for all.

The European Union is committed to creating more and better jobs and a socially inclusive society. ESF works by investing in Europe’s human capital: its workers, its young people and all those seeking a job, in particular those who find it difficult to get work.

How much do we have in the North East LEP area? 3

Durham £66.5m

Tyne Wear & Northumberland £139m How much do we have in

the North East LEP area? 3

How much do we have in the North East LEP area? 3

Durham £50.8m4

Tyne Wear & Northumberland £131.6m

What we will achieve?

Enterprises supported 13,714

New enterprises 4,191

Employment Increase 4,138

Green House Gas reductions 39,695

What we will achieve?

Jobs created 350

Businesses supported 140

Premises with access to super-fast broadband

300

What we will achieve?

Participants engaged in programmes

167,570Unemployed engaged

in programmes 51,070

Participants with disabilities 32,870

Participants under the age of 25 14,770

Participants aged 25 - 29 1,460

Participants aged 50+ 36,260

Ethnic minorities 9,300

£205.5m£10.5m

£182.4m

TotalTotal

Total

09

Northumberland, Tyne and Wear Durham

Allocation in strategy (£)

Current allocation from government (£)

Increase / Decrease in Allocation

Allocation in strategy (£)

Current allocation from government (£)

Increase / Decrease in Allocation

European Regional Development FundInnovation 26,814,802 26,814,802 0 18,200,000 14,231,081 3,968,919

SME Competitiveness 63,900,000 59,479,606 4,420,394 31,500,000 31,316,780 183,220

Low Carbon 38,886,609 43,307,003 -4,420,394 9,900,000 16,552,629 -6,652,629

Climate Change 5,846,612 5,846,612 0 2,387,663 2,387,663 0

Community Led Local Development 3,582,779 3,582,779 0 3,600,000 2,040,100 1,559,900

European Social FundAccess to employment 26,446,782 26,446,782 0 5,730,733 5,730,733 0

Sustainable Integration of Young People 6,727,206 6,727,206 0 5,220,000 807,388 4,412,612

Youth Employment Initiative 0 0 0 12,780,000 12,780,000 0

Active Inclusion 15,451,531 15,451,531 0 6,959,724 6,959,724 0

Community Led Local Development 6,617.417 6,617.417 0 1,875,153 1,875,153 0

Access to Lifelong Learning 63,153,280 63,153,280 0 15,411,470 19,824,131 -4,412,661

Improving labour market relevance of education and training systems 13,235,235 13,235,235 0 2,792,796 2,792,796 0

ESIF Allocations Split by ThemeOur proposals for European Structural and Investment Funds are based on a significant evidence base and widespread local partner engagement and consultation.

The resulting allocations represent the best fit of these in relation to the national Operational Programme figures as provided by the Managing Authorities to each LEP area. These figures are subject to final approval and agreement. There are a few areas where our local proposals do not fit with the national figures provided, these are set out below and are the subject of on-going negotiation.

Throughout the strategy we have referred to our proposed figures, rather than the initial indicative allocations proposed by the Managing Authorities: DCLG and DWP.

Our notional allocation is also provided in Euros and this will fluctuate with the exchange rate.

For current planning purposes this is expressed as a pound figure using an exchange rate of 0.71, as advised by the Managing Authorities.

010

Innovation SME Competitiveness

Low Carbon

Climate Change

Community Led Local

Development

Durham (£66.5M) £18.2m £31.5m £10m £3.1m £3.8m

Tyne and Wear, Northumberland

(£139M)£26.8m £63.9m £38.9m £5.8m £3.6m

ACTIVITIES

Improve access to appropriate incubation space, and test and lab facilities, to increase number of businesses innovating & the commercialisation of research and development (1a)• Provide specialist infrastructure

and facilities to support smart specialisation areas

• Provide incubation space and incubator programs (idea creation, innovation awareness and open innovation activities, Intellectual Property strategies, investor readiness, etc.)

• Improve access to incubation space• Provide appropriate test and

lab facilities

Support greater collaboration and open innovation between enterprises, research and public institutions (1b)• Support ‘Open Innovation’ through a

single Regional Innovation Network• Support activity that increases

start-ups and spin outs delivering innovation

• Support University Research Commercialisation Initiatives (university/business consortiums)

Support bringing more new products / processes to firm/market (with a focus on our smart specialisation areas) (1b)• Support to increase innovation

in businesses• Support catalytic competitions

- promote innovation in smart specialisation sectors

• Support Grand Challenge projects (address socio-economic challenges through innovation)

• Support other Innovation and research and development project specific support

Ensure the right blend of finance is available to support business formation & growth through Jeremie2 (3a and c)

Ensure a co-ordinated and integrated Business Support offer; with clear alignment with the North East Growth Hub and mainstream funded activities. (3a, c and d)• Increase entrepreneurship

and enterprise by promoting skills to start a business/self-employment

• Investor readiness (focus on smaller businesses with high growth potential)

• Increase growth, productivity & resilience

• Increase trade & export growth

• Social Enterprise support (pre-start, start up guidance, advice & business planning)

• Digital technologies (SME support to take up superfast broadband and strengthen digital capacity)

• Increase inward investment into region

• Developing enterprise learning & skills development

• Provide mentoring for private and social enterprises

Develop strategic sites and provide appropriate incubation and grow on space for businesses, potentially through an Urban Development Fund (3a and c)

Support growing the low carbon sector, capitalising on innovative technologies (4f).• Support to enhance the supply

chains (particularly renewable energy generation, construction and retro-fit and intelligent and integrated systems such as smart grids)

• Support the development and commercialisation of new and innovative technologies and demonstrate responses which reduce carbon emissions and energy use (target : smart specialisation sectors)

Reduce the costs, and carbon impact of, energy generation and usage• Enhance access to, and take-up of,

low carbon and renewable energy by supporting demonstration and roll out of small-scale renewable energy (4a)

• Support innovative approaches and technologies to improve the energy efficiency of energy systems, networks and public, and community sector properties (4c)

Support the demonstration of integrated technologies and data-based approaches to achieve ‘whole place’ carbon reduction (4e)

Support climate change adaptation• Support advice to businesses to

improve energy efficiency and resilience (4b)

• Support projects that demonstrate the use of green and blue infrastructure to improve business resilience to flooding (5b)

Enhance capacity within communities for economic growth• Support new/

improved Community Hubs delivering community and business benefits.

• Support stronger linkages into the wider economy by the strengthening of local supply chains, business networking, and wider interventions from partners to tackle specific economic issues.

• Support interventions that support entrepreneurship and enterprise including pre-start activity, in a holistic manner which links businesses to local accommodation and support.

• Support for new forms of enterprise (including social enterprise).

Sustainable Urban Development 5

£4m £14m | £2.6m

European Regional Development Funding in the North East LEP area In summaryThe European Regional Development Fund (ERDF) aims to strengthen economic and social cohesion in the European Union by correcting imbalances between its regions. In response to the challenges and opportunities for growth set out in our Strategic Economic Plan, the North East LEP area will focus its activities around the following:

5 Sustainable Urban Development (SUD) Funding has already been accounted for in the total allocations given at the top of the table. A Sustainable Urban Development Strategy has been developed to operate in the ‘More Developed’ part of the North East LEP area; this will draw on £20.6m of investment. The North East Combined Authority will take on delegated functions to select projects as the Intermediate Body for SUD.

011

Skills Employment Inclusion Community Led Local Development6

Durham (£50.8m) £18.2m £23.7m £6.9m £1.9m

Tyne and Wear, Northumberland

(£131.6)£76.4m £33.2m £15.5m £6.6m

ACTIVITIES

Support for Management, Leadership and Enterprise skills (2.1) Support skills provision that delivers an increase in business starts targeted at the smart specialisation and growth sectors; pre-start support; entrepreneurial skills development; and training for innovators throughout their academic and business careers.

Support for employer led skills activities (2.1) Focused on SMEs in smart specialisation and growth sectors.

Support skills development for the workforce (2.1) Develop skills including: for those newly employed/ low skilled and those facing redundancy; enabling progression into sustainable work. Focus on low skilled, tackling barriers to employment. Skills refresh e.g. IT skills/specific qualifications to address gaps in emerging technologies.

Support for industry specific intermediate and high level skills that respond to employer demand and offer flexible responses to emerging and projected skills needs (2.1) Focused on smart specialisation and growth sectors.

Support for collaborative projects (2.1) Placements, internships or other activities enabling students & graduates to gain industry relevant experience & skills to meet current & future employment demands.

Enable businesses to engage in skills provision & work directly with education providers to link industry with curriculum (2.2). Locally relevant activities supported will align course content with business demand, lead to increased work placement opportunities and create work-ready, highly skilled employees.

Business/educator links for business growth (2.2) To include wage subsidy schemes to encourage take up of graduates & highly skilled staff; tackling replacement demand and succession planning leading to increased participation in higher level skills

Access to Employment for Job seekers & Inactive People (1.1)• Support for individuals with

mental health issues• Support individuals who

are completing work programmes but are not in employment

• Access to labour market: programme of engagement & employability skills provision supporting unemployed/inactive to participate in activities leading to employment. To include locally responsive and intelligent Information, Advice and Guidance service

Sustainable Integration of Young People (1.2 & 1.3)• Address gaps in provision

for young people aged between 15 – 24 that are Not in Education, Employment or Training (NEET) or at risk of becoming NEET

• Youth Employment Initiative (1.3 - Durham only) addresses gaps in provision for young people aged 15 – 29 but the focus will be on those aged 15 - 24

Address multiple barriers to employment for those furthest away from the labour market (1.4)

Build capacity and support the voluntary and community sector and social enterprises to address multiple barriers to employment (1.4)• Provide grants to deliver

services for those furthest from the labour market.

• Support to develop the capacity and leadership of social entrepreneurs to address need of local community

Targeted support for those with protected characteristics (1.4)• Address long term

imbalances in key sectors• Specific tailored support

to address imbalances, including access for vulnerable groups and deprived areas.

Localised support to ensure people from deprived areas can move toward or into employment (1.5).• Identify and tackle specific

local barriers to employment and skills.

• Support social integration initiatives

• Support interventions which focus on connecting businesses and fostering good relationships with local residents to raise their awareness of local career opportunities, engaging those furthest from the labour market, including younger people and raising the aspirations of people aged 50+.

• Deliver learning, skills and employability activity to build re-engagement of those who would not access this provision through other areas of the European Structural and Investment Fund Programme, mainstream provision or employment.

European Social Funding in the North East LEP area In summaryThe European Social Fund (ESF) aims to help people get better jobs and ensure fairer job opportunities for all. In response to the challenges and opportunities for growth set out in our Strategic Economic Plan, the North East LEP area will focus its employment, inclusion and skills activities around the following:

6 Note; Community Led Local Development funding is drawn from inclusion allocation.

012

£10.5m

Support for micro and small businesses (measure 6.4)

Provide capital grants to support rural businesses grow and create jobs• Focus on key sectors: manufacturing,

engineering, pharmaceuticals, food and drink, tourism and creative industries

• Investment that increases business productivity and creates opportunities for job creation in higher level skills and in wage levels

Provide appropriate tourism accommodation, priorities for the first call are: particularly in the following areas:• Outside of market towns, where they have

links to attracting more dark skies visitors and/or plug gaps in accommodation on recognised cycle and walking routes

• In the upland areas (including Kielder Water and Forest Park Northumberland National Park and adjacent settlements and the North Pennine Area of Outstanding Natural Beauty (AONB)

• High quality accommodation (properties with Visit England 4 star accreditation)

£5m

Support for broadband infrastructure (measure 7.3)

Provide Superfast Broadband to rural localities not yet served and outside of current rural superfast roll-out plans, particularly in more remote parts of Northumberland • Collaborative approaches to invest in

community broadband solutions • Fixed and mobile technology solutions

£0.5m

Support for visitor destinations and tourism infrastructure (measure 7.5)

Provide opportunities to improve the range and quality of tourism destination facilities to attract more higher spending and longer staying visitors from outside the North East • Enhancing visitor facilities in connection

with emerging market e.g. ‘Dark Skies’ visitor economy

• Development of adventure recreation - walking trails, cycle routes, water sports and climbing

• Development of nature tourism – including in our AONBs, National Park and other protected landscapes

• Support for heritage attractions – improving access and understanding of our industrial, Christian, Roman heritage

£4.5m

Support for tourism co-operation (measure 16.3)

Development of Destination Management Plans and collaborative initiatives between businesses to identify and develop networks and supply chains.

£0.5m

European Agricultural Fund For Rural Development in the North East In summaryRural development policy helps rural areas to meet economic, environmental and social challenges and opportunities that face them in the 21st century. In the North East LEP area our rural areas make an important and distinctive contribution to the North East economy of which tourism plays an important role. However, whilst employment and self–employment and also home-working are notably higher than our urban communities, levels of productivity per job are relatively low.

With an indicative allocation of £10.5m from the National Growth Programme – the European Agricultural Fund for Rural Development (EAFRD)7– there is an opportunity to address this productivity gap by supporting both direct investment in small businesses and local economic infrastructure that can attract new and benefit existing businesses. The North East Farming and Rural Advisory Network (NEFRAN), North East Rural Growth Network and Northern Tourism Alliance are playing an important role in ensuring stakeholders representatives from our rural communities and organisations, who collectively have a vast range of knowledge and expertise in the rural economy, are engaged and consulted in the identification of priorities and development of project calls.

Although a number of scattered localities are potentially eligible for EAFRD funding in Tyne and Wear, the focus is on the designated rural areas of Northumberland, Durham and neighbouring parts of western Gateshead, including the Derwent Valley.

Following consultation with regional stakeholders we have set out our preferred EAFRD resource allocations, subject to agreement with the Rural Payments Agency. The specific priorities listed below relate to the first calls for projects which we expect to issue in 2016.

7 Please note the allocation is subject to final confirmation in light of revaluation this will inform the final allocation for each measure.

013

Governance Underpinning significant investment in the local area over the next seven years, ESIF funds are an important element in achieving our aspirations. For this to be successful it must be based on local understanding and partner aspiration. Our local ESIF sub-committee brings together partners from across a wide range of sectors and organisations to support and advise on the delivery of the programme.

Governance frameworkOur governance approach must fit with the national programme requirements as set out in the national Partnership Agreement and Operational Programmes. Each LEP area has brought together a local sub-committee to advise locally, supporting the work of the national Growth Programme Board

Consistent with this framework, our North East LEP area ESIF sub-committee has been established, chaired by Paul Woolston, to advise the Managing Authorities on the North East LEP areas strategy. It brings together representatives from:• Business (including specific

representation for small enterprises and social enterprises)

• Central government (BIS)• County Durham

Economic Partnership• Education, skills

and employment• Equalities and

non-discrimination• Further education• Higher education• Managing authorities

(DWP, DCLG and DEFRA)• North East Combined Authority

• North East LEP• Rural areas• Sustainability• Trade unions• Voluntary and Community Sector

The terms of reference set out consistent roles and responsibilities for the sub-committee in advising the Managing Authority on the development of calls and the strategic fit of projects. This ensures alignment with the ERDF and ESF Operational Programmes and the North East LEP area ESIF strategy, specifically the sub-committee role includes:

• Providing advice to the Managing Authority on local development needs and opportunities.

• Working with sectors and organisations they represent so that they engage with and understand the opportunities provided by ESIF Funding.

• Promoting active participation amongst local economic, environmental and social partners to help bring forward activities which meet local needs.

• Providing local intelligence to aid the development of project calls.

• Providing advice on local economic growth conditions and opportunities.

• Contributing advice, local knowledge and understanding to the Managing Authorities to aid good delivery against spend milestones, cross-cutting themes, outputs and results.

• Having regard to the Managing Authority’s statutory duties under the Equalities Act 2010, provide information advice and

local knowledge regarding the likely and actual impact of ESI Funds strategies and plans on persons with the protected characteristics and advice on mitigating measure where adverse impacts are identified.

Fund CoverageThe sub-committee role will cover ERDF, ESF and EAFRD; however the Operational Programme for EAFRD sets out a slightly different role for the sub-committee.

As there is a separate national Programme Monitoring Committee for the EAFRD programme and different approach to project selection and approval, the North East LEP area ESIF sub-committee will not formally be a sub-committee of the EAFRD Programme Monitoring Committee. It will however provide advice to the Managing Authority on relevant activities.

Tools to be usedIn delivering our strategy we will make use of a range of delivery tools to maximise the benefits of the investment to the local area. Whilst each of these fits within the broad approach ESIF funding the precise approach to governance will be a tailored in each case.

• Open calls – the most common mechanism for accessing European Structural and Investment Funds is through open calls. These are published regularly on .gov.uk and targeted at different elements of the programme. They seek partners to come forward with project ideas and match funding. The local sub-committee with provide advice to the Managing Authority on the content and timing of these calls and

provide advice on the strategic fit of proposals as part of the Managing Authorities assessment. Successful applications will go through a two stage process of outline and full application.

• Opt-ins –the opt-ins provided by the Skills Funding Agency, Big Lottery Fund and Department of Work and Pensions, will support the delivery of the ESF proposals across all strands. These provide the match funding for projects of joint interest. These will be managed according to the individual mechanisms established for each opt-in but will be overseen by the ESIF sub-committee providing advice on the proposed content and the application by the opt-in body.

• Sustainable Urban Development (SUD) – through SUD the North East Combined Authority will take on the role of ‘urban authority’ for this element. The sub-committee will continue to fulfil the function of providing advice and information on development and decision making accompanied by additional expert members to reflect the specific requirements of Sustainable Urban Development. Sustainable Urban Development does not bring additional funding but directs £20.6m from within the overall ‘more developed’ category of region expenditure.

• Community-Led Local Development (CLLD) – CLLD is a bottom-up approach to European funding which engages and empowers local communities through Local Action Groups. These are formed in the successful areas to develop and finalise a local

strategy and make decisions on individual projects. The sub-committee, in line with the overall strategy, will provide advice on the overall approach and priorities for CLLD in the North East LEP area and receive updates on progress.

• Financial instruments – The European Commission has approved a number of financial instruments to enable more effective use of European funding in local areas and reduce market distortion. These instruments can take a number of forms providing repayable finance such as loans and debt finance or a financial stake in the project such as equity which can later be disposed of with financial returns. Due to the potential to secure long-term finance which can be used to re-invest in the local area we have chosen to make use of financial instruments throughout our programme. These will be commissioned in line with the ESI Funds strategy with an organisation in place to make independent, commercial, compliant investment decisions.

DevolutionAs part of devolution deal, the North East Combined Authority will take on limited Intermediate Body status for the European Structural and Investment Funds from April 2016. The detail of this is to be agreed between the Combined Authority and national government, appropriate governance arrangements will be developed as part of this process ensuring these remain complaint with European legislation and guidance and maintaining full partner participation.

014

Contact Us

Working in Partnership

Developing the strategyEuropean funding is an essential element in delivering on our local aspiration for ‘more and better jobs’ as set out in the North East Strategic Economic Plan (SEP). The SEP and this strategy represent the culmination of the work of a large number of local partners. The strategy builds on the shared evidence base of the North East Strategic Economic Plan and seeks to put this in the European funding context. Partners have been engaged throughout this process responding professionally and rapidly to external changes to the programme context.

The document represents an evolution from the original ‘Towards a Prospectus’ document produced in 2013 through consultative drafts of the strategy produced in 2013 and 2014. Since this point iterative modifications have been made refining proposals and responding to the finalisation of the national Operational Programmes.

The strategy is evidence-based, drawing on the North East Independent Economic Review and evidence gathered to inform its development. This robust work has been enhanced through targeted studies and research projects on Smart Specialisation, sustainable growth and inclusive growth in the North East LEP area.

Our strategy development process also included engagement and consultation with a wide range of stakeholders. The initial document was informed by three task and finish group which focused on strategic direction,

a pipeline of projects and governance. The work of these groups led to the development of the initial draft strategy which was subject to full consultation in late 2013.

The consultation received 270 responses to the online survey with strong support the approach taken and priorities identified with 74% agreeing with our identification of the key challenges and proposed allocations and 82% agreeing with the proposed objectives.

Over 100 people attended a series of workshop as part of the consultation covering public, private and voluntary organisations addressing each of the themes identified and again strongly supporting the development approach taken.

Following submission on-going communications have been undertaken to maintain understanding of the proposals. Following the establishment of the shadow sub-committee in the North East LEP area in December 2014 the role for overseeing the development has been undertaken through the sub-committee.

Supporting the agendaPartners have a key role in not only developing the approach to European funding, but also in ensuring it successfully delivers for the businesses and people of the North East.

Building on the approach to developing the strategy partners will be engaged throughout delivery, not only through the sub-committee and formal governance arrangements but also through communications, workshops and events and on-going support.

As we set out in the North East LEP area Statement of Ambition for Technical Assistance we are aware of the importance of support to applicants and potential applicants in understanding the opportunities and requirements of European Structural and Investment Funds. Sharing this expertise is essential in successful delivery of the programme by assisting partners to bring forward applications which are eligible and address local strategic need.

To achieve this, partners in the area are developing a joint proposal through the North East Combined Authority bringing together local authority expertise and the North East Local Enterprise Partnership. This will provide a coordinated and integrated approach to support providing both area-wide strategic support and more local project support.

Through this approach partners will be able to access advice and support in developing applications with raised awareness of the programme. This will be achieved through:

• A series of integrated workshops and events to increase understanding and awareness of the opportunities, European funding framework and application process.

• Supporting good practice through publication of consistent information through the North East Combined Authority website and other local partner websites including supporting documentation.

• One-to-one support for project applicants in developing the proposal.

• Regular information provided through questions and answers and e-bulletins.

• Access to networking and sharing opportunities such as the North East Growth Hub portal.

We will develop a local network of Technical Assistance projects working closely with the Managing Authorities to ensure close alignment and shared understanding of the issues and practical solutions. This will lead to more eligible applications, improved compliance and more effective projects.

Particular arrangements will be put in place to ensure partnership engagement and involvement in delivery through the specific mechanisms available. Most particularly through Local Action Groups established for CLLD and in advising and supporting Sustainable Urban Development where additional partners with the required expertise will be engaged as part of the governance structures.

Further details will be available on the

North East Combined Authority website.

northeastca.gov.uk

North East LEP 1 St James Gate, Newcastle upon Tyne, NE1 4ADTel: 0191 338 7420 | Email: info@nelep.co.uk | northeastlep.co.uk | @northeastlep