North East LEP area. European Structural and Investment Fund Strategy

Transcription

1 North East LEP area European Structural and Investment Fund Strategy Together we will create more and better jobs through smart, sustainable and inclusive growth. January

2 Contents page 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 02

3 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 35.4 billion to the UK economy in 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 grew at a faster rate than most other LEP areas during 2013 and was ranked 4th amongst all LEPs for growth in GVA per head during NELEP was ranked 5th for growth in GVA per head over the 10 year period 2003 and 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 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 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 LEP Area ESI Fund Chair Today the North East is a globally competitive economy. Population of: The North East LEP area contributes to the UK economy. 03

4 The North East Local Enterprise Area Economy Key facts 1 To Edinburgh, Glasgow, Aberdeen Wooler Berwick-upon-Tweed A1 Holy Island Farne Islands Principal rail links Tyne & Wear Metro LEP boundary Motorway Key routes Enterprise Zone Ports Airports Population 1.95 MILLION 1.25m Working Age 370,000 Retirement (65 +) 340,000 Young People (Under 16) Self Employed people 98, % of total workforce jobs GVA 35.4bn GVA per head 18,111 A68 Northumberland National Park Rothbury A697 Alnwick A1 Coquet Island 351,000 People with High Level (Level 4) Skills 310,000 People Economically Inactive To Carlisle, Manchester A69 Haltwhistle Bellingham A68 Hexham A696 A69 Morpeth Newcastle Airport Blaydon Ashington Blyth A189 Cramlington Whitley Bay North Shields NEWCASTLE UPON TYNE GATESHEAD A1 South Shields 29% of Working Age Population National Average: 36% 25.1% of Working Age Population National Average: 22.3% A68 Consett A692 A693 Chester-le- Street A691 A68 Spennymoor Bishop Aucklund Washington A1 (M) DURHAM A690 Seaham Houghton -le-spring Easington A19 Sedgefield SUNDERLAND Peterlee Wingate 883,900 People Employed 69.4% Aged National average: 78.3% 49,230 Enterprises (VAT/PAYE Registered) 87% Micro 13% Small/Medium 0.4% Large Newton Aycliffe Employed by SME Businesses A688 Barnard Castle To York, Leed, London, Midlands 350,000 1 All data is based on the latest information available as at 25 January Source ONS 60% of total private sector business employment 04

5 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 strengths In 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 privatesector 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 economy Our 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, 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. 05

6 To maximise growth opportunities we need to build on our strengths and address our weaknesses Weaknesses Strengths 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). Manufacturing Strong manufacturing expertise, leading to a high proportion of employees in this sector, making up 10% of North East LEP area jobs. Knowledge intensive business Concentration of knowledge intensive businesses particularly in software technology, electronic, gaming and creative businesses. Attractiveness Attractiveness of area s lower living costs, increasing real value of wages. Connectivity International and national access via Newcastle International Airport, North Sea ports, High Speed Rail Connections and trunk road network. Trade The 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%). 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. Assets Outstanding natural and developed assets, including UNESCO World Heritage Sites, a National Park, and transport infrastructure. Housing Housing stock in need of investment to improve availability of quality homes. Employment and Inclusion High 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%. Skills Below 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. Private sector Under represented private sector particular in services such as professional, technical and business administration. Enterprise rates Low enterprise rates and dependency on large and public sector employers as source of employment. Digital connectivity Has 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 Internal connectivity Localised congestion, weak public transport access to some key employment areas and isolated communities. Public transport affordability, ageing infrastructure and inadequate rail capacity. External connectivity Poor 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. Access to finance Lack of access to appropriate access to finance and limited supply of investment to Small and Medium Enterprises and social enterprises. Research and development Low investment in research and development activities. Opportunities Institutions Reputation of academic and research institutions, innovation assets and networks. Productivity Capitalise on existing strength to raise productivity levels around vehicles and offshore energy. Trade Strength in growing export industries and improving access to international markets via the regions ports and new international flight paths. Enterprise zone Benefits for investors for locating in area s Enterprise Zone area or City Deal/ Accelerated Development Zones schemes. Cost and connectivity Competitive input/land costs, web connectivity and sectoral strengths for major employers. Social economy Growth potential in delivering goods and services which have wider social benefits. Open procurement opportunities through the Social Values Act. Threats Demographic change An ageing population means that we will need to adapt to an ageing workforce who are 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. Graduate retention, Progression and Migration Increased numbers of businesses demanding highly skilled labour are required to avoid underemployment and address longer term skills retention and attract inward migration. 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. Skills The ability to match the supply of skills with business needs. 06

7 The North East Local Enterprise Partnership area - our plan for growth 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 on this plan. Our aim is to achieve the following: Business growth & finance Our goal is to create an intelligent business ecosystem that supports and accelerates 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. 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. 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 flexible and skilled regional workforce that is able to meet the needs of our businesses. 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 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. By 2024 our economy will provide over one million jobs 07

8 European Structural and Investment funding Helping to deliver our plan for growth Our 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 more developed which means their economic performance is 90% or above the European GDP average; projects in this area can secure up to 50% of ESIF funding 2 All 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 ERDF Aims 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 mediumsized 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. How much do we have in the North East LEP area? 3 Durham 66.5m ESF Aims 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 50.7m 4 Tyne Wear & Northumberland 131.6m EAFRD Rural 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 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. Tyne Wear & Northumberland 139m How much do we have in the North East LEP area? 3 Total 205.5m What we will achieve? Enterprises supported 13,626 New enterprises 4,165 Employment Increase 4,145 Green House Gas reductions 40,328 Total 182.3m What we will achieve? Participants engaged in programmes 163,930 Unemployed engaged in programmes 55,020 Participants with disabilities 33,150 Participants under the age of 25 19,900 Participants aged ,460 Participants aged ,330 Ethnic minorities 9,510 Total 10.5m What we will achieve? Jobs created 350 Businesses supported 140 Premises with access to super-fast broadband

9 ESIF allocations split by theme Our 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. There are a few areas where our local proposals do not fit with the national figures provided, these are set out below. Throughout the strategy we have used the national allocations proposed by the Managing Authorities: DCLG and DWP, but these do not reflect local priorities. 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. Northumberland, Tyne and Wear Durham The outputs included have been provided by the managing authorities on national modeling and do not necessarily match the local context. Preferred local allocation ( ) Current allocation from government ( ) Increase / Decrease in Allocation Preferred local allocation ( ) Current allocation from government ( ) Increase / Decrease in Allocation European Regional Development Fund Innovation 26,814,802 26,973, ,490 18,200,000 14,343,699 3,825,739 SME Competitiveness 63,900,000 59,888,340 3,969,643 31,500,000 31,397,093 62,263 Low Carbon 38,886,609 43,344,613-4,415,988 9,900,000 16,667,423-6,668,190 Climate Change 5,846,612 5,818,404-28,207 2,387,663 2,544, ,920 Community Led Local Development 3,582,779 3,006, ,627 3,600,000 1,575,384-2,199,266 European Social Fund Access to employment 26,446,782 26,446, ,730,733 5,730,733 0 Sustainable Integration of Young People 6,727,206 6,727, ,220,000 5,220,000 4,412,612 Youth Employment Initiative ,780,000 12,780,000 0 Active Inclusion 15,451,531 15,078, ,582 6,959,724 7,034,877 75,153 Community Led Local Development 6, ,000, ,583 1,875,153 1,800,000-75,153 Access to Lifelong Learning 63,153,280 63,153, ,411,470 15,411,469-4,412,662 Improving labour market relevance of education and training systems 13,235,235 13,235, ,792,796 2,792,

10 European Regional Development Funding in the North East LEP area - in summary The 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: Durham ( 66.5M) Tyne and Wear, Northumberland ( 139M) Innovation SME Competitiveness Low Carbon Climate Change Community Led Local Development 14.3m 31.4m 16.7m 2.5m 1.6m 27m 59.9m 43.3m 5.8m 3m 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. 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 010

11 European Social Funding in the North East LEP area - in summary Skills Employment Inclusion Community Led Local Development 6 The 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. Durham ( 50.7m) Tyne and Wear, Northumberland ( 131.6) ACTIVITIES 18.2m 23.7m 7m 1.8m 76.4m 33.1m 15.1m 7m 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 progress or sustainment in 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 (2.2) 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 support 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 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 but the focus will be on those aged 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. 011

12 European Agricultural Fund For Rural Development in the North East - in summary 10.5m Rural 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 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 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 Support for visitor destinations and tourism infrastructure (measure 7.5) 4.5m 7 Please note the allocation is subject to final confirmation in light of revaluation this will inform the final allocation for each measure. 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 012

13 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 framework Our 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 subcommittee 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, crosscutting 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 Coverage The 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 used In 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 subcommittee 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. Devolution As 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 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. 013

14 Working in partnership Developing the strategy European 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 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 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 workshops 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 ongoing 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 agenda Partners 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 ongoing 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. Contact Us Further details will be available on the North East Combined Authority website. northeastca.gov.uk 014

15 North East LEP 1 St James Gate, Newcastle upon Tyne, NE1 4AD Tel: info@nelep.co.uk

16 Innovation

17 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 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 is leading a new industrial revolution, with strengths that allow us to stand out from the crowd. We call these our smart specialisation areas: Passenger vehicle manufacture We are leading the way to provide a cleaner, greener, future for all We are looking for innovative solutions to provide a cleaner, greener future for our transport systems, homes and cities one of the world s biggest 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. Creative, digital, software and technology Subsea and offshore engineering Our 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. We continue to find innovative solutions that give us a leading edge in subsea technologies globally. Life sciences & healthcare Our globally significant sectors are strong and growing We produce 33% of the UK s GDP 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 we host world class universities who lead on cutting edge research and development in this sector. Other areas of competitive advantage ---- Satellite Surface Science Ageing We have one of the fastest growing 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. We will build on our position as one of the UK s leading academic bioscience centres for research, teaching and training. Energy Systems

18 The North East LEP area also faces innovation challenges 576m spend on research and development Of which 309m spent by business and 250m spent by higher education institutions (ONS, 2013). Despite a rise of 35m compared to the previous year R&D expenditure in the NE is less than half that spent in the next lowest spending region of England. Total R&D spend in the NE accounts for 2% of UK expenditure and 2.3% of England s expenditure on R&D 1.9% UK average proportion of GVA spent on R&D 1.2% North East proportion of GVA spent on R&D R&D SPEND COMING FROM UNIVERSITIES UK AVERAGE: 26.4% PRIVATE SECTOR INNOVATION EXPENDITURE UK AVERAGE: 63.9% LOW LEVELS OF PATENTS 26.5 PER MILLION INHABITANTS AGED NATIONAL AVERAGE: 56.4 SHORTFALL IN FINANCE FOR INNOVATING BUSINESSES (Especially proof of concept funding)

19 INNOVATION --- Durham 14.3m The need Actions supported Future key focus 2 1A ENHANCING RESEARCH AND DEVELOPMENT The North East LEP area needs to facilitate effective innovation activity by building and developing innovation hubs and incubation facilities that support the development of innovation centric businesses. This in turn will bring more products, services and processes into firms and to the market, which will create growth. Improve access to appropriate incubation space and test and lab facilities to increase number of businesses innovating & the commercialisation of research and development: Provide specialist infrastructure and facilities to support smart specialisation areas. Provide incubation space and incubator programs (for example: idea creation, innovation awareness and open innovation activities, Intellectual Property strategies, investor readiness). Improve access to incubation space. Provide appropriate test and lab facilities. The North East LEP area has a high proportion of capital projects selected, many are related to the provision of incubation space and support which has been identified as a key area of need locally. Moving forward, there will be a need to continue to support incubators by making available future funding under ERDF for this purpose Durham Tyne and Wear, Northumberland Tyne and Wear Northumberland 27m --- Outputs CO25 P1 P2 Number of researchers working in improved research infrastructure facilities Number of researchers working in improved research or innovation facilities Public or commercial buildings built or renovated 15 FTEs 31 FTEs 784 sq metres CO25 1B SMART SPECIALISATION SUPPORT P1 P2 Number of researchers working in improved research infrastructure facilities Number of researchers working in improved research or innovation facilities Public or commercial buildings built or renovated 36 FTEs 71 FTEs 1,818 sq metres The need The North East LEP area has a relatively low level of corporate, SME and broader public sector innovation. In particular we need to address the following: Support growth in our smart specialisation areas: passenger vehicle manufacture; creative, digital, software and technology; subsea and offshore engineering; and life sciences and healthcare. Support businesses that are innovating, or who want to innovate. Raise the innovation profile of the area both nationally and internationally. Build innovation capacity and capability within and across the sectors through open innovation and collaboration. Increase the network intensity and the integration / joining up of academic networks, catapults, industry and innovation hubs. Address the low levels of innovation skills (linked to European Social Fund Activities).

20 Actions supported Future key focus 1 Outputs Support greater collaboration and open innovation between enterprises, research and public institutions Support open innovation through a single Regional Innovation Network. Support activity that increases graduate 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) 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. We have mapped all the existing projects under innovation and have established a low level of support in place for graduate startups and for the development of our smart specialisation sectors: Graduate start-ups - particularly focussed in the commercialisation of products/processes and services undertaken by students. The Grand Challenge - to support businesses seeking to address socio-economic challenges though innovation. Catalytic competitions - to create SME growth in our smart specialisation areas. Durham CO01 CO02 CO03 CO04 CO05 CO06 CO07 CO08 CO26 CO28 CO29 P2 Number of Enterprises receiving support; of which: - Number of Enterprises receiving grants - Number of Enterprises receiving financial support other than grants - Number of Enterprises receiving non-financial support - Number of new Enterprises supported Private investment matching public support to enterprises (grants) Private investment matching public support to enterprises (non-grants) Employment increase in supported enterprises Number of enterprises cooperating with research institutions Number of enterprises supported to introduce new to the market products Number of enterprises supported to introduce new to the firm products Public or commercial buildings built or renovated Tyne and Wear, Northumberland ,341 euros 691,527 euros 41 FTEs 280 FTEs sq metres Outputs CO01 CO02 CO03 CO04 CO05 CO06 CO07 CO08 CO26 CO28 CO29 P2 Number of Enterprises receiving support; of which: - Number of Enterprises receiving grants - Number of Enterprises receiving financial support other than grants - Number of Enterprises receiving non-financial support - Number of new Enterprises supported Private investment matching public support to enterprises (grants) Private investment matching public support to enterprises (non-grants) Employment increase in supported enterprises Number of enterprises cooperating with research institutions Number of enterprises supported to introduce new to the market products Number of enterprises supported to introduce new to the firm products Public or commercial buildings built or renovated 1, ,015 euros 1,319,229 euros 88 FTEs 601FTEs sq metres 1 Please note; this will be subject to review by the North East LEP area ESIF Committee at regular intervals during the lifetime of the programme.

21 What will we achieve? Through investments made by the European Regional Development Funding we will deliver the following: OUTPUT 2 TARGET CO01 Number of Enterprises receiving support; of which: 1,630 CO02 Number of Enterprises receiving grants 1,142 CO03 Number of Enterprises receiving financial support other than grants 47 CO04 Number of Enterprises receiving non-financial support 398 CO05 Number of new Enterprises supported 138 CO06 Private investment matching public support to enterprises (grants) 1,380,356 Euros CO07 Private investment matching public support to enterprises (non-grants) 2,010,756 Euros CO08 Employment increase in supported enterprises 129 FTEs CO25 Number of researchers working in improved research infrastructure facilities 51 FTEs CO26 Number of enterprises cooperating with research institutions 881 CO28 Number of enterprises supported to introduce new to the market products 129 CO29 Number of enterprises supported to introduce new to the firm products 259 P1 Number of researchers working in improved research or innovation facilities 102 P2 Public or commercial buildings built or renovated 3,306 sq metres 2 The output targets reflect those prescribed by Government and are under negotiation. The latest definitions can be found at

22 Small and medium enterprise (SME) competitiveness

23 SME competitiveness Our goal is to create an intelligent business ecosystem that supports and accelerates 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. The North East Local Enterprise Partnership (North East LEP) area has a focus on enhancing business formation and growth, especially in our smart specialisation sectors. We will give our economy greater competitive advantage by enhancing entrepreneurship and enterprising skills; boosting prosperity, productivity and profitability, which will lead to increases in wages and employment. Deliver and develop the North East Business Growth Hub We will make the North East a place where it is easy to start and grow a business by helping businesses find and utilise the right information, expert advice and finance to grow and thrive. We will ensure simple, cohesive and integrated access to business development and innovation advice, information and support via northeastgrowthhub.co.uk In delivering the Growth Hub we will support a diverse and cohesive business support ecosystem. Ensure a co-ordinated and integrated business support offer; with clear alignment with the North East Growth Hub and mainstream funded activities. We will support our smart specialisation and growth sectors by addressing their specific business support requirements where there are gaps in existing mainstream provision; this support will cover entrepreneurship, business start-up and growth support, plus access to appropriate finance. We will further internationalise our economy by attracting direct Investment and tourism from outside the North East LEP area. We will continue to support a thriving rural economy, building on existing economic strengths, assets and networks to create and sustain businesses and jobs. We will develop strategic sites and provide appropriate incubation and grow- on space for businesses, potentially through an urban development fund. Ensure the right blend of finance is available The ability to access finance is important for cash flow; funding business investment, facilitating new business start-ups and ensuring businesses have the opportunity to reach their full growth potential. Inadequate access to finance remains a key risk to survival and growth and there are a number of issues affecting the supply of both debt and equity finance to SMEs. Through JEREMIE 2 - a financial instrument for businesses we will deliver equity, loan, guarantees and mixed investments to businesses wanting to start up and grow. This will also increase the efficiency of the European Structural and Investment Funds by leveraging additional public, private or social finance. Strengthen programme governance, leadership and management ---

24 The North East SMEs also face challenges 49,235 ENTERPRISES (VAT/PAYE REGISTERED ) 87% micro (less than 10 employees) 13% small & medium ( employees) 0.4% large (250+ employees) LOW GVA PER HOUR WORKED UK AVERAGE: AND for all LEPs LOW ENTERPRISE RATE OVER RELIANCE OF PUBLIC SECTOR EMPLOYMENT 395 BUSINESSES PER 10,000 HEAD OF POPULATION (aged 16-64) English average: % of public sector employment vs. 17.2% UK (2015)

25 SME COMPETITIVENESS The need 3A ENSURE THE RIGHT BLEND OF FINANCE IS AVAILABLE TO SUPPORT BUSINESS FORMATION AND GROWTH Market failure in access to finance for SMEs and limited supply of investment finance. Demonstrated demand at a national and local level for significant access to finance improvements for SMEs across debt, mezzanine and venture capital mechanisms. --- Durham 31.4m Tyne and Wear Northumberland 59.9m --- Actions supported The need Work towards creating the best venture capital industry outside of London by developing and delivering an integrated business investment fund, through the JEREMIE2 framework, and by working through delivery partners to market the availability of funds and to raise levels of investment readiness. Communicate to finance partners on business growth successes and generate further interest in the North East Growth Hub. Improve access to angel and mentor networks through the North East Growth Hub. Consider and act on any further needs to ensure the right blend of finance is in place to support business formation and growth. 3A & D: ENSURE A CO-ORDINATED AND INTEGRATED BUSINESS SUPPORT OFFER, WITH CLEAR ALIGNMENT WITH THE NORTH EAST GROWTH HUB Our existing strengths lie in advanced manufacturing, our fantastic healthcare system and technologies (such as virtual reality, electric vehicles and advanced materials), pharmaceuticals, energy, low carbon and renewable technologies, logistics, professional services, higher and further education, agriculture and tourism all of which are showing promising signs of growth. The North East is also emerging as a potential global leader in a number of new and emerging industries. As a world leader in low carbon vehicle technology, 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 & technology communities in UK; thriving subsea and offshore sectors, as well as a globally significant presence in the health and life science sectors. However, the area has the following challenges: GVA per hour worked is low: compared to the UK average, and for all LEPs. Enterprise rate is low: 395 businesses per 10,000 head of population (aged 16-64) compared to 613 per 10,000 for England. An improved entrepreneurial culture including through enterprise, self-employment and enhanced entrepreneurial skills in employment will contribute to structural change in the economy and boost capacity across the SME business base. Entrepreneurship can be supported in appropriate ways - in disadvantaged communities, graduate retention and through social entrepreneurship and enterprise. The private sector is underdeveloped: Dependency on large and public sector employers, an under-represented private sector particularly in professional services leading to an overall a shortage of 60,000 jobs in the economy.

26 Skills levels are low: Only 29% of the working age population has skills at Level 4 or above. This lags 7 % points behind the English rate. Lack of coordinated business support: Whilst it is acknowledged that there may be diverse local needs, business and enterprise support needs to be coordinated with local providers providing a complementary offer to national services and ensuring the full spectrum of demand-led support is available. Low productivity: Businesses with high growth potential are under-represented in the business base. Skills development and targeting of areas of economic strength are essential. Actions supported 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. 3A, C & D: DEVELOP STRATEGIC SITES AND PROVIDE APPROPRIATE INCUBATION AND GROW-ON SPACE FOR BUSINESSES, POTENTIALLY THROUGH AN URBAN DEVELOPMENT FUND The need Infrastructure deficit: Further capacity is needed in strategic locations where infrastructural improvements could lead to growth including grow-on and managed workspace, incubation and demonstrator sites, development in support of supply chain growth and growth through inward investment. Low levels of innovation intensity: 1.3% of GDP spend on R&D activity in contracts to 1.9% at UK level with a reliance on university activity. There is a persisting low level of patent applications. Actions supported Investment to address identified development need. Development of strategic locations where infrastructural improvements could lead to growth. Development of grow on and managed workspace, incubation and demonstrator sites. Implementation of financial instruments such as an Urban Development Fund to investment in capital development to support growth.

27 What will we achieve? Through investments made by the European Regional Development Funding we will deliver the following targets OUTPUTS 1 TARGET 3A TARGET 3C TARGET 3D Durham Tyne and Wear, Northumberland Durham Tyne and Wear, Northumberland Durham Tyne and Wear, Northumberland CO01 Number of enterprises receiving support ,739 2,425 1,043 1,570 CO02 Number of enterprises receiving grants ,160 1, ,048 CO03 CO04 Number of enterprises receiving financial support other than grants Number of enterprises receiving non- financial support CO05 Number of new enterprises supported CO06 Private investment matching public support to enterprises (grants) 2,447,549 Euros 3,203,473 Euros 7,342,646 Euros 9,965,854 Euros 4,842,813 Euros 7,288,525 Euros CO07 CO08 CO28 CO29 P11 P13 P2 Private investment matching public support to enterprises (non- grants) Employment increase in supported enterprises Number of enterprises supported to introduce new to the market products Number of enterprises supported to introduce new to the firm products Number of potential entrepreneurs assisted to be enterprise ready Number of enterprises receiving information, diagnostic and brokerage Public or commercial buildings built or renovated 80,515 Euros 137,879 Euros 2,415,483 Euros 4,283,562 Euros 1,610,309 Euros 2,445,086 Euros 289 FTEs 445 FTEs 723 FTEs 1,152 FTEs 433 FTEs 653 FTEs ,226 2, sq metres 113 sq metres 217 sq metres 294 sq metres 130 sq metres 196 sq metres 1 The output targets reflect those prescribed by Government and are under negotiation. The latest definitions can be found at

28 Low carbon economy & climate change

29 Low Carbon economy and Climate Change We aspire to become Europe s premier location for low carbon, sustainable, private-sector led growth making the most of our extensive assets and distinct strengths to drive growth which is both resilient and sustainable With key successes in offshore wind technologies and electric vehicles, the North East has been at the forefront of the move towards low carbon economic growth. With a track-record of innovation in energy and manufacturing technologies, a strong academic base and valuable natural assets, our strategy is not only to enhance and commercialise existing strengths but also to bring the next opportunities to market and enable long-term sustainable and resilient growth. Growing Low Carbon sectors We have significant and growing opportunities in low carbon technologies, processes and applications Our low carbon, environmental goods and services sector supports around 20,000 jobs and has underpinned significant employment growth and attracted major investment. We are particularly strong in energy, heat and transport with high proportions of the national employment in offshore wind, geothermal, hydroelectric, and biomass energy, alternative fuels, heat networks and electric vehicles present in the North East. The low carbon economy also links strongly to our innovation base, with overlap with areas of smart specialisation in vehicle manufacture, offshore and marine technologies and data and software. We also have natural assets in our marine environment, coast and upland areas and forests as well as untapped geothermal potential. Our strengths are not only in a strong business base but also world-class research, testing and demonstration sites. This includes part of the National Offshore Renewable Energy Catapult in Blyth, Zero Carbon Future, NOF Energy and engagement in the Energi Coast and CORE initiatives. These complement the academic strengths of our four universities with offshore wind, energy and energy storage. Achieving sustainable growth Investment in enhancing the sustainability and resilience of our businesses will support long-term competitiveness Although the North East represents a relatively resilient location business growth in environmental terms, investment will enable us to capitalise and protect this advantage. Businesses in the North East have reported challenges around energy and resource efficiency and issues regarding flooding as being significant. This is supported by a Climate North East study, which estimated that without interventions there is a potential cost to the North East of England of 600m per year by UK climate projections also indicate heat risk may be an issue towards the end of the century. Our diverse landscape, including urban and rural dimensions, and coastal, upland and river valley areas create significant opportunities as well as some challenges. These natural sites and space available for development, provides opportunities for more sustainable and innovative solutions to support long-term sustainable development. To achieve this change and capitalise on our opportunities we will have identified key areas for activity Growing the low carbon sector (including capitalisation on innovative technologies and enhancing supply chains. Renewable and low carbon energy generation, distribution and storage. Energy efficiency in processes, properties and technologies for public, private and voluntary and community sectors. Supporting smart places and future city initiatives bring together innovative, integrated solutions across buildings and places. Making sustainable places improving resilience through green and blue infrastructure solutions.

30 The North East LEP area also faces Low Carbon challenges HIGH LEVELS OF FUEL POVERTY In 2003 and 2013, the North East region had the lowest variation across Local Authorities in terms of fuel poverty, however, it had the highest rate of fuel poverty in England in 2003, and the second highest in 2013 % of fuel poor households % NE vs. 10.4% England LACK OF BUSINESS READINESS FOR CLIMATE CHANGE & LOW AWARENESS OF OPPORTUNITIES TO IMPROVE ENERGY EFFICIENCY RIVER, COASTAL AND SURFACE WATER FLOODING A RISK, AND PROJECTED TO INCREASE CONGESTION AND TRANSPORT RELATED CARBON EMISSIONS ARE INCREASING NEW SUSTAINABLE TRANSPORT SOLUTIONS ARE NEEDED

31 LOW CARBON ECONOMY --- Durham 16.7m Tyne and Wear Northumberland 43.3m --- The need Actions supported 4A PROMOTING THE PRODUCTION & DISTRIBUTION OF RENEWABLE ENERGY Renewable and low carbon energy already represents over 6,000 jobs in the North East. In comparison to the overall size of the economy there are particular concentrations in areas related to biomass, offshore wind, hydroelectricity, geothermal and heat pumps. There is scope to capitalise on natural assets and renewable sources of energy present. The large supply of biomass includes the largest softwood resource in England in Kielder Forest. The presence of the Stublick Fault providing unrivalled access to geothermal sources of energy. The location on the North Sea coast also provides natural connection to marine energy sources including proximity to Dogger Bank and other offshore wind sites in the North East and the operational testing site at Blyth. Strong interest in community energy schemes to target roll out of smaller-scale, local generation schemes with potential across a wide range of renewable sources of energy. Smart specialisation capacity recognised in this area drawing on research capacity including in the Durham Energy Institute and Sir Joseph Swan Centre for Energy research at Newcastle, local businesses, the National Offshore Renewable Energy Catapult and engagement in CORE and Energi Coast sites; however continued support and certainty is needed to embed the industries and demonstrate viability of renewable energy projects. Enhancing access to, and take-up of, low carbon and renewable energy through investment to support demonstration and roll out of small-scale renewable energy. This includes biomass, waste to energy, community owned renewables, solar PV, micro-hydro, offshore and marine energy and geothermal. Measures to support increased production of renewable fuels and energy, in particular wind energy, solar and biomass; Support to build capability and capacity for supply chains in renewable energy; Demonstration and deployment of renewable energy technologies; Measures to support the wider deployment of renewable heat, including micro-generation, geothermal, renewable heat networks or district heating, ground source and air source heat pumps, and biomass systems with associated heat off-take and heat distribution networks along with recycling processing reprocessing and remanufacturing facilities; and Anaerobic digestion plants and other biomass or landfill gas schemes. Durham Tyne and Wear, Northumberland Outputs CO01 CO05 CO30 CO34 Number of enterprises receiving support Number of new enterprises supported Additional capacity of renewable energy production Estimated GHG reduction mw 2,344 Tonnes of CO2eq CO01 CO05 CO30 CO34 Number of enterprises receiving support Number of new enterprises supported Additional capacity of renewable energy production Estimated GHG reduction mw 5,925 Tonnes of CO2eq

32 4B PROMOTING ENERGY EFFICIENCY & RENEWABLE ENERGY USE IN ENTERPRISES The focus of ERDF funding The need Actions supported Businesses continue to report a need to reduce energy and resource costs as a significant element in business resilience. This is particularly relevant for manufacturing and engineering businesses which are relatively energy intensive. Investment in advice, guidance and audits is valuable but the greatest need, especially for SMEs is around ensuring the resulting interventions are affordable and the business case for investment is clear. SMEs and particularly micro businesses have been found to struggle in implementing energy efficiency requirements due to cost and difficulty as well as lack of comprehensive information. Energy efficiency and advisory services provide nearly 4,000 jobs in the North East. Scope for investment in renewable energy generation and use for businesses to support resilience. Support a programme of advice to businesses to improve energy efficiency and resilience through enhanced processes and enable the resulting required retrofit, capacity and equipment investment. Enhanced advice, support, information and action to promote innovation in businesses and how they operate, in order to deliver best practice in energy management. This will include innovation in energy efficiency and energy cost reduction to improve businesses competitiveness and resilience; Support to businesses to undertake green diagnostics or audits of energy efficiency and potential for renewable generation and energy use, which will be followed by provision of energy efficiency information and guidance, tailored energy action plans and of support to implement the resulting activities. Investing in energy efficiency measures, processes and renewable generation capacity to improve a business or building s environmental performance or its resilience to the impacts of climate change; Investing in measures to stimulate cost-effective deep renovations of buildings, including staged deep renovations; Supporting an increase in energy efficiency in enterprises including an emphasis on whole place especially through improving industrial processes, designing out waste, recovery of waste heat energy and CHP; Supporting increased SME access to national and local government procured contracts for energy efficient goods and services; Developing low carbon innovation in relation to energy efficiency within enterprises, including through technologies and engagement practices; Building retrofit and energy efficiency measures, especially whole building solutions to exemplify, and support the commercialisation of, next phase technologies which are near to market and low carbon construction techniques to improve the energy efficiency of buildings. Durham Tyne and Wear, Northumberland Outputs C1 C34 Number of enterprises receiving support Estimated GHG reductions 305 1,665 Tonnes of CO2eq C1 C34 Number of enterprises receiving support Estimated GHG reductions 1,003 4,889 Tonnes of CO2eq

33 4C SUPPORTING ENERGY EFFICIENCY, SMART ENERGY MANAGEMENT AND RENEWABLE ENERGY USE IN PUBLIC BUILDINGS LOW CARBON ECONOMY The need Actions supported To ensure security and affordability of energy supply in the long-term there is a need to move towards whole building approaches, founded on the intelligent use of data, to reducing energy usage and carbon intensity. Public sector buildings provide appropriate demonstration sites to trial new financial and technological solutions to reduce carbon emissions and equivalent Green House Gases levels, and to inspire local areas and partners to adopt them as a practical solution. Public and community buildings face particularly large energy efficiency issues with large scale use and ageing infrastructure. Energy efficiency and advisory services provide nearly 4,000 jobs in the North East. The North East has an ageing and inefficient housing stock, which needs significant intervention to reduce domesticsector emissions The North East LEP area is at the forefront of technology application of smart systems technology and routes to provide integrated and intelligent approaches to energy generation. Invest in innovative approaches and technologies to improve the energy efficiency of energy systems, networks and public, and community sector properties. Provision of advice and support to increase the use and take up of low carbon technologies, energy efficiency measures, renewable energy technologies and smart energy systems in housing stock and public buildings; Supporting low carbon innovation in relation to the integrated whole place energy management approach including energy waste and re-use; Investing in building retrofit, energy efficiency measures, renewable and smart energy systems deployment, especially whole building or place solutions exemplifying next phase technologies which are near to market; Investing in domestic energy efficiency, renewable energy and smart construction techniques; Investment in the development and wider use of Energy Performance Contracting in the public buildings and housing sectors. Durham Tyne and Wear, Northumberland Outputs CO31 CO32 CO34 Number of households with improved energy consumption Decrease of annual primary energy consumption of public buildings Estimated GHG reductions ,144 kwh/yr 2,368 Tonnes of CO2eq CO31 CO32 CO34 Number of households with improved energy consumption Decrease of annual primary energy consumption of public buildings Estimated GHG reductions ,631 kwh/yr 7,075 Tonnes of CO2eq

34 4E PROMOTING LOW CARBON STRATEGIES The need The interconnected nature of carbon emissions activities requires whole place, integrated responses using innovative technologies, which seek to realise the multiple benefits, e.g. cycle lanes that can generate energy, and help channel water to reduce flood risk. In comparison to other areas the North East LEP has higher than average CO2 per capita emissions for industry and commercial and domestic outputs (both higher than the UK figure). The figure for transport is lower than the national average reflecting lower car ownership, mileage and a relatively strong public transport infrastructure; however car use is rising rapidly and remains the most common mode of transport. Journeys on foot and by bike (which are both sustainable and support healthy lives) are less common than other areas and are lower than comparative areas. The North East has pioneered integrated systems including combined heat and power systems and district heating. Recent investment has been successfully brought forward in networks and district heating schemes, but more needs to be done, especially in relation to electricity. Challenges also remain over ageing infrastructure, joining up separate schemes, and the age of some of the original examples such as the ground-breaking Byker Wall scheme. Investment in integrated, systems approaches to better use data to demonstrate practical solutions for whole places (such as smart grids) which reduce carbon emissions and improve place resilience and sustainability. This will include heat, power and transport systems investment for future places. LOW CARBON ECONOMY Investments in local/regional smart grid demonstration projects, including validation and solving system integration issues; Sustainable energy action plans for urban areas, including public lighting systems, smart metering and distribution through smart grids; Investments in combined heat and power from renewable sources; Investments to encourage the adoption of renewable technologies. Actions supported Outputs A strategic approach is particularly important in the area of low carbon transport, whether for sustainable urban mobility, or improving links between urban and rural areas, or connecting dispersed rural communities. Examples of actions include: Investments in actions aimed at improving the capacity at local level to develop and implement integrated and sustainable transport strategies and plans (including for example actions related to modelling data collection, integrated transport management, operations and services, public consultation etc) to reduce transport related air pollution, in particular retrofit or replacement programmes for bus fleets, incentive schemes for cleaner transport, improved public transport infrastructure and alternative forms of transport; Investments in actions aimed at introducing innovative environmentally-friendly and low-carbon technologies (for example, alternative fuel stations or charging points); Investments in actions aimed at developing innovative and multi-modal transport services (for example, intelligent transport systems for travel information and planning, traffic and demand management, smart ticketing, multimodal integrated datasets or cooperative systems); Innovative transport pricing and user charging systems; Cycle paths, walkways and waterways only where part of an integrated approach to GHG reductions. Durham Tyne and Wear, Northumberland CO01 CO34 Number of enterprises receiving support Estimated GHG reductions 250 2,315 Tonnes of CO2eq CO01 CO34 Number of enterprises receiving support Estimated GHG reductions 1,264 10,910 Tonnes of CO2eq

35 LOW CARBON ECONOMY The need Actions supported 4F PROMOTING RESEARCH AND INNOVATION IN, AND ADOPTION OF, LOW CARBON TECHNOLOGIES The North East has a strong asset base to draw on in low carbon and sustainable innovation, with significant expertise and infrastructure around low and ultra-low carbon emission vehicles and offshore wind which have benefited from investment during the last programme. A number of other areas however also provide significant opportunities for future innovation-led growth. With the likes of Nissan, Hitachi Rail Europe, Sevcon, Smith Electric and AVID vehicles all based in the North East LEP area there is a strong business base supporting growth in low carbon transport and vehicle technologies. These not only provide significant employment but also bring to market market-leading technologies. Investment in related skills around electric vehicles, hydrogen technologies and battery manufacturing through Gateshead College and Zero Carbon Futures and the Skills Academy for Sustainable Manufacturing and Innovation proved low carbon innovation skills. Nissan alone through the LEAF development has created 350 jobs and safeguarded a further 1,000. The North East has installed over 1,000 charge points as part of the Plugged-in Places programme which has resulted in the strongest charging point network outside of London and highest take up of low carbon vehicles in the UK. However, this is still a small proportion of overall vehicle usage and needs to be broadened and widened significantly to meet carbon budgets. The North East has an established sub-sea and marine engineering business base including companies such as GE, BEL valves, A&P, SMD, Teckmar Subsea and Technip Umbilicals. The siting of the Blyth wind blade testing site and the Offshore Renewable Energy Catapult further enhances this support and provides an opportunity to build on successful previous investments. Broader energy development building on expertise and natural resources will benefit from the support to overcome the demonstration and roll out gap for new technologies. Similar to those areas supported in previous programme and investment these can provide significant future jobs growth opportunities and source for exports. Despite opportunities the need to demonstrate and commercialise ideas remains a challenge and market failure and local businesses fail to fully understand the opportunities presented and routes to entry. Assist local SMEs to engage with, and enhance the supply chains making the most of opportunities. These will be particularly focused around renewable energy generation, construction and retro-fit and intelligent and integrated system such as smart grids. Support the development and commercialisation of new and innovative technologies to bring to market and demonstrate responses which reduce carbon emissions and energy use. Particularly targeted at areas of smart specialisation and key sectors (Offshore and marine energy; low and ultra-low carbon vehicles and low carbon built environment. R&D, innovation and supply chain work for low carbon technologies and materials, including, wave and wind energy, smart grids, distributed generation, solar and photovoltaics, heat networks, heat pumps and low carbon heat for energy intensive industries; Research underpinning carbon capture and storage, taking account of the restrictions laid down in Article 3.3.b of the ERDF Regulation 114; Technology centres of excellence and test facilities, including relevant Catapult centres; Renewable technologies in the UK renewable energy roadmap; Research, development, demonstration and adoption of technologies and systems that support low-energy transport and accelerate the establishment of new technologies such as low emissions vehicles (electric, hybrid and hydrogen);

36 Knowledge transfer with Higher Education/Further Education institutions and Businesses; Supporting low carbon tech start-ups and greater commercialisation of low carbon products and processes; Developing financing methods that encourage the adoption of proven low carbon technologies and generate long-term financial savings; Demonstration and deployment of decentralised renewable energy technologies; Research, development and innovation and supply chain development for low carbon and resource efficient technologies and materials (including small scale pilot programmes that test the market with new low carbon solutions and the use of secondary materials). Durham Tyne and Wear, Northumberland Outputs CO01 CO05 CO26 CO29 CO34 Number of enterprises receiving support Number of new enterprises supported Number of enterprises cooperating with research institutions Number of enterprises supported to introduce new to firm products Estimated GHG reductions Tonnes of CO2eq CO01 CO05 CO26 CO29 CO34 Number of enterprises receiving support Number of new enterprises supported Number of enterprises cooperating with research institutions Number of enterprises supported to introduce new to firm products Estimated GHG reductions ,910 Tonnes of CO2eq CLIMATE CHANGE ADAPTION --- Durham 2.5m The need 5B PROMOTING INVESTMENT TO ADDRESS SPECIFIC RISKS, ENSURING DISASTER RESLIENCE The diverse landscape of the North East, including coastal, upland and river valley areas with both urban and rural dimensions creates unique opportunities and challenges. Significant development opportunities and key employment sites are prone to river and surface flooding. Work around key sites will improve sustainability and businesses resilience for those at risk from flooding. This includes at major sites including Team Valley, along the rivers Tyne and Wear as well as the city and town centre locations including Newcastle, Durham, Chester-le-Street and Morpeth. The North East has opportunities for more innovative and sustainable solutions to flooding using onsite or upstream interventions which also enhance the quality of the natural and built environment. As well as reducing water flows, the use of Blue and Green infrastructure approaches offer a variety of additional benefits for businesses and their employees. Work by Eftec shows it can also increase rateable values, increase the attractiveness of economic centres, improve energy efficiency, and improve air quality (in turn improving employee productivity).

37 Tyne and Wear Northumberland 5.8m --- Actions supported Investment in natural flood management and mitigation approaches which reduce flood risk for key employment locations and business development sites. This can be undertaken onsite or upstream and should enhance the quality of the natural environment. Actions which support enhanced green and blue infrastructure development will be particularly welcomed as will those which support improvements across a wider area. Particular actions include: Fluvial risk management: Onsite or upstream attenuation and slowing the flow measures Diversion channels; Raising strengthening and/or extending river walls and frontages; Fixed and temporary barriers and gates; Stepped back embankments; Resilience measures for business infrastructure, including for example wet or dry flood-proofing; River restoration and improved conveyance measures. Surface water run-off and drainage system: Integration, including retrofitting, of surface water and run off management measures into urban and commercial redevelopments; Innovative measures in contexts where flood risk and land management relies on pumping and inter-relates with drainage. Durham Tyne and Wear, Northumberland Outputs CO23 P6 Surface areas of habitats supported to attain a better conservation status (ha) Businesses and properties with reduced flood risk 1 1,232 CO23 P6 Surface areas of habitats supported to attain a better conservation status (ha) Businesses and properties with reduced flood risk 3 3,382

38 What will we achieve? Through investments made by the European Regional Development Funding we will deliver the following: OUTPUT 1 LOW CARBON CLIMATE CHANGE Durham Tyne and Wear, Norhumberland Durham Tyne and Wear, Norhumberland C1 Number of enterprises receiving support 646 2, C5 Number of new enterprises receiving support C23 C26 C29 Surface areas of habitats supported to attain a better conservation status Number of enterprises cooperating with research institutions Number of enterprises supported to introduce new to the firm products ha 3 ha C30 Additional capacity of renewable energy C31 C32 C34 Number of households with improved energy consumption Decrease of annual primary energy consumption of public buildings Estimated GHG reduction ,144 kwh/yr 427,631 kwh/yr 0 0 9,618 Tonnes of CO2eq 30,710 Tonnes of CO2eq 0 0 P6 Businesses and properties with reduced flood risk 0 0 1,232 3,382 1 The output targets reflect those prescribed by Government and are under negotiation. The latest definitions can be found at

39 Sustainable urban development

40 Sustainable urban development Backed by excellence in areas of smart specialisation, innovation and a rapidly developing expertise in areas of low carbon growth, the North East approach to sustainable urban development (SUD) is built around the development, demonstration and commercialisation of new integrated approaches to global urban challenges, becoming a living laboratory. Sustainable urban development provides an opportunity to test and develop integrated responses to the key global challenges facing urban areas. This will draw on the capacity and expertise of the full range of partners represented in the quadruple helix of private, public and voluntary and community sectors working with universities and research institutions. Integrated activities that address these pillars will be sought. Sustainable energy systems and networks Investment in integrated energy systems and deployment of new technologies in demonstration site(s) to support carbon reduction. This will include premises in more deprived locations to ensure fuel poverty reduction is achieved. Includes capacity building for businesses and citizens to use the systems. Sustainable infrastructure investment Ensuring capital and infrastructure investments supported through SUD respond to and support the need for flood mitigation and biodiversity improvements through green and blue infrastructure. Lower carbon and more sustainable transport Investment to support healthier and more sustainable travel choices. Improved information and data systems to support modal shift and accompanying demonstrator investment in cycle and walking infrastructure to link to key employment sites and transport hubs. Investment for low carbon vehicles infrastructure. Investment in traffic management systems and approaches to support smoother and smarter traffic flows to reduce carbon emissions for road transport and schemes to manage loads and address freight flow. Healthy lives and ageing Investment in a demonstrator project for responding to poor health and an ageing population to enable healthier and independent lives. SUD

41 4B & C: SUPPORTING ENERGY EFFICIENCY IN ENTERPRISES AND PUBLIC INFRASTRUCTURE SUSTAINABLE URBAN DEVELOPMENT --- COVERING SOUTH NORTHUMBERLAND AND TYNE AND WEAR AREAS 20.6m The need Actions supported Energy use represents a significant contribution to carbon emissions across both domestic and commercial properties. With older building stock, and low incomes in the domestic sector, and high-demand industries, there is mismatch between supply and demand. The ageing nature of infrastructure means this remains vulnerable to climate change impacts and extreme weather undermines business resilience. However, much of the traditional interventions have been done, and new technologies and financial models are needed to achieve the next round of carbon savings. Building on the strengths in low carbon energy generation and established research and innovative energy and heating networks, sustainable urban development will support a small number of demonstrator projects for integrated energy network solutions. This will address challenges in different types of property and location to reduce energy demand and use, reducing energy poverty and improve resilience to climate change. These investments will include connection to and expansion of systems involving existing domestic and commercial premises to demonstrate possible solutions in retro-fitting properties in addition to investments in new properties. Investment in integrated energy systems demonstration site(s) to support carbon reduction and reduce carbon intensity. Investment in premises and locations, with a particular focus on locations to reduce fuel poverty. Support activities to embed and enhance capacity to engage with and use the systems Tyne and Wear, Northumberland Outputs 4B CO01 CO34 Number of enterprises receiving support Estimated annual decrease of GHG Tonnes of CO2eq 1 Please note all spend and outputs included under Sustainable Urban Development are NOT additional and count towards achieving spend and output targets under innovation, low carbon and climate change adaptation. The figures included here are estimates on a proportionate basis of total spend. Due to on-going uncertainty these are will require additional modelling in light of latest government guidance and criteria.

42 Outputs 4C CO31 CO32 CO34 Number of households with improved energy consumption classification Decrease of annual primary energy consumption of public buildings Estimated annual decrease of GHG ,579 kwh/yr 4245 Tonnes of CO2eq 4E PROMOTING LOW-CARBON STRATEGIES FOR ALL TYPES OF TERRITORIES The focus of ERDF funding The need This priority (4e) will support a range of integrated activities, in addition to supporting those areas set out under the other investment priority area, this will focus on integrated activities and bringing these together alongside investment to support improvements in transport networks and systems. As with energy systems, transport networks are fundamental to economic prosperity and inclusion but also represent a global challenge in the face of the need to reduce carbon emissions and address congestion which reduce opportunities for economic growth. Through these areas investment will also support the availability of travel information to support modal shift, reducing carbon emissions by encouraging use of public transport network and encouraging the use of healthier options such as walking and cycling which are low in the North East. In addition to this, investment in data and information systems and availability, hard investments in linked physical infrastructure such as cycle paths, storage and walking routes are required to improve linkages into key sustainable transport hubs including in the urban area building on the Tyne and Wear Metro, major bus interchanges and the larger stations on the East Coast mainline, Sunderland and the Tyne Valley line to Hexham. To enhance the sustainability of transport options in the urban area and encourage more healthy travel options sustainable urban development will invest in schemes which use data to improve road transport flows (which represent that majority of transport options) and considering better management of flows across 24 hours incorporating new options for freight management through improvements to urban traffic management systems. A final element builds on strengths in low and ultra-low carbon vehicles, expanding on work undertaken through the previous Plugged-in Place scheme and infrastructure to enable and encourage use of low carbon technologies such as electric vehicles. Actions supported Investment to support healthier and more sustainable travel choices. Improved information and data systems to support modal shift and accompanying demonstrator investment in cycle and walking infrastructure to link key employment sites and transport hubs. Investment for low carbon vehicles infrastructure. Investment in the traffic management systems and approaches to support smoother and smarter traffic flows to reduce carbon emissions and improve freight flows and management.

43 Tyne and Wear, Northumberland Outputs CO01 CO034 Number of enterprises receiving support Estimated GHG reductions Tonnes of CO2eq

44 The focus of ERDF Funding The need Actions supported Outputs The need Actions supported 1B PROMOTING BUSINESS INVESTMENT IN RESEARCH AND INNOVATION Poor health and wellbeing, and an ageing population are two key challenges in relation to the economy. Poor health and wellbeing can have major impacts on economic activity and prosperity and vice versa, and the North East is also facing an ageing population, meaning more people will be in work for longer, and once retired, will collectively gradually increase demand on public services. To address the ageing challenge, infrastructure and processes will need to be more accessible across all age groups and incorporate elements and solutions to improve quality of life as people age. There is therefore a need to promote the development and design of urban areas which accounts for people in all stages of life. Through sustainable urban development, investment will build on the expertise of the Centre for Ageing and Vitality and strong citizen-led initiatives across the urban area. This will support demonstration and trialling of innovative and data-led solutions which improve the accessibility of services and infrastructure enabling healthy choices which reduce energy and fuel poverty as well as improving health outcomes and work readiness. Investment in demonstrator project for responding to poor health and an ageing population to enable healthier independent lives. CO01 CO026 CO028 Tyne and Wear, Northumberland Number of enterprises receiving support Number of enterprises cooperating with research entities Number of enterprises supported to introduce new to the firm products 5B PROMOTING INVESTMENT TO ADDRESS SPECIFIC FLOOD RISKS Blue and Green Infrastructure, when correctly deployed have the potential to create significant multiple benefits to the economy, society and the environment, over and above addressing flood risk. As well as increasing property values and making areas more economically attractive, they can provide insulation, reducing costs. It also has positive effects on physical health such as through air quality benefits, as well as mental health improvements. From an environmental perspective, in addition to reducing energy use and storing carbon, they also support biodiversity. These issues are all challenges for the long term sustainability of urban areas, and developing integrated approaches offers significant potential improvements in value for money. However there is often a mismatch between investment and beneficiaries, which can hinder investment. Ensuring capital and infrastructure investments supported through SUD respond to and support the need for flood mitigation and biodiversity improvements through green and blue infrastructure Tyne and Wear, Northumberland Outputs CO23 P6 Surface area of habitats supported in order to attain better conservation status (ha) Business and properties with reduced flood risk

45 What will we achieve? Through investments made by the European Regional Development Funding we will deliver the following targets: OUTPUT 2 TARGET Tyne and Wear, Northumberland CO01 Number of enterprises receiving support 1207 CO23 Surface area of habitats supported in order to attain better conservation status 0.5 hectares CO26 Number of enterprises cooperating with research entities 84 CO28 Number of enterprises supported to introduce new to the market products 12 CO31 Number of households with improved energy consumption 266 CO32 Decrease of annual primary energy consumption of public buildings 256,579 kwh/yr CO34 Estimated GHG reductions 15,013,874 tonnes of CO2eq P6 Business and properties with reduced flood risk The output targets reflect those prescribed by Government and are under negotiation. The latest definitions can be found at 3 Please note that this table includes all PA 4 Outputs. For Tyne and Wear and Northumberland a proportion of these will be delivered through Sustainable Urban Development. This is set out in the following section

46 Community-Led Local Development

47 Community- Led Local Development Community-Led Local Development (CLLD) provides an opportunity to support social inclusion by working with people from the most deprived and excluded communities to enable them to actively contribute to the local economy through the development and implementation of a local strategy. Despite the strong performance in improving the overall economic position of the North East since the significant economic restructuring of the 1980s and 1990s, the North East LEP area continues to face particular challenges around social inclusion with communities excluded from, or not benefitting fully, from wider economic growth. We recognise the social and economic value in closing this gap between communities with inclusive growth a key principal in our approach to European funding. Our proposals therefore include support for inclusion activities across the full area but, with pockets of significant and entrenched deprivation presenting particular challenges, a more local and spatial approach is needed to complement these broader activities. Community-Led Local Development can fulfil this need and is based around two key aims: Building capacity within communities as a foundation for economic growth To make the most of this opportunity partners in the North East LEP believe Community-Led Local Development is appropriate where it realises the full benefits of: Allowing access to detailed knowledge of very local challenges to be addressed. Enabling mobilisation of local resources and best use of local assets people, property, skills and existing monies. A well-developed and comprehensive local development strategy which result in the delivery of a coherent cluster of projects which add value to each other. Piloting approaches at a relatively small scale that can be scaled up and used more widely to connect communities to address social and economic challenges. Encouraging a sense of ownership and commitment to the projects and strategy, and builds capacity within communities which can aid sustainability beyond the life of the project. Community-Led Local Development provides an opportunity to support social inclusion Delivering additional, localised support to people in particularly deprived areas, so that they move towards or into employment

48 COMMUNITY- LED LOCAL DEVELOPMENT --- Durham 1.6m ERDF 1.8m ESF Tyne and Wear Northumberland 3m ERDF 7m ESF --- The need 1A ENHANCING RESEARCH AND DEVELOPMENT Key national statistics show that the North East is lagging behind in a range of economic activity indictors. The North East has an economic activity rate of 69.9% compared to a national average of 72.9%. Similarly, levels of employment and self-employment are below the national average (7.6% compared to a national average of 6% for unemployment and 7.4% compared to 10.1% for selfemployment). Rates for economic activity due to long term sickness show an even greater disparity with 28.5% in the North East compared to 21.6% national average. These lower rates of activity, and wider context, result in sizable challenges around poverty and deprivation. The North East region has only 85% of the national disposable household income level and almost a quarter of people live in households below the poverty threshold. 28% of children live in households below the national average income level and child poverty rates remain almost 5% higher than the national average with over 130,000 children living in poverty. From these statistics there are clearly major challenges for the area if it is to meet its economic growth targets, and for all communities to participate in this. This need is heavily concentrated, although there are pockets of relative prosperity within all seven local authority areas in the North East LEP area. Overall, levels of deprivation (as set out in the 2010 Index of Multiple Deprivation) remain high, with the authorities ranging from 40th to 135th (out of 326) of the most deprived local authorities nationally, with all but two in the worst performing 25%. According to the 2010 data 31.7% of the population live in the 20% most deprived areas. Skills levels remain below the national average at 28.4% compared to 35% nationally achieving Level 4 qualifications. Particular challenges are visible around long term sickness (which is almost 7 percentage points higher than the national average), financial disadvantage (with households only having 85% of national disposable income levels and 28% of children living in households below the national average income level. NEWCASTLE UPON TYNE Average Score Rank 40/326 GATESHEAD Average Score Rank 43/326 SUNDERLAND Average Score Rank 44/326 SOUTH TYNESIDE Average Score Rank 52/326 DURHAM Average Score Rank 62/326 NORTH TYNESIDE Average Score Rank 113/326 NORTHUMBERLAND Average Score Rank 135/326 According to the 2015 IMD statistics, the North East LEP area remains significantly deprived and is the 10th most deprived partnership area in the country with all seven local authorities being in the most deprived 50% and four within the most deprived 25% of local authorities. This however masks significant differences within areas with CLLD a route to tackle this at the most local level.

49 ERDF 9D UNDERTAKING INVESTMENTS IN THE CONTEXT OF COMMUNITY-LED LOCAL ECONOMIC DEVELOPMENT STRATEGIES Actions supported 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 which 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). Durham Tyne and Wear, Northumberland Outputs CO01 CO05 CO08 P11 P12 Number of enterprises receiving support Number of new enterprises receiving support Employment increase in supported enterprises Number of potential entrepreneurs assisted to be enterprise ready Public or commercial buildings built or renovated FTEs sq metres CO01 CO05 CO08 P11 P12 Number of enterprises receiving support Number of new enterprises receiving support Employment increase in supported enterprises Number of potential entrepreneurs assisted to be enterprise ready Public or commercial buildings built or renovated FTEs 1, sq metres ESF 1.5 COMMUNITY-LED LOCAL DEVELOPMENT Actions supported Localised support to ensure people from deprived areas can move toward or into employment. 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 Durham Tyne and Wear, Northumberland Outputs 01 CO01 CO CO16 Participants Unemployed, including long-term unemployed Inactive Participants over 50 Participants from ethnic minorities Participants with disabilities 1,660 1, CO01 CO CO16 Participants Unemployed, including long-term unemployed Inactive Participants over 50 Participants from ethnic minorities Participants with disabilities 7,870 5,510 1,970 1, ,270

50 What will we achieve? Through investments made through Community-Led Local Development we will deliver the following targets: OUTPUT 1 ERDF C1 Number of enterprises receiving support 425 C5 Number of new enterprises receiving support 298 C8 Employment increase in supported enterprises 320 P11 Number of potential entrepreneurs assisted to be enterprise ready 1,193 P12 Public or commercial buildings built or renovated 1,018 ESF 01 Participants 9,530 CO01 Unemployed, including long-term unemployed 6,670 CO03 Inactive 2, Participants over 50 1, Participants from ethnic minorities 1,070 CO16 Participants with disabilities 2,710 ESF RESULTS TARGET ESF - CR02 R1 R2 Durham, Tyne and Wear, Northumberland Participants in education or training on leaving Unemployed participants in employment, including self-employment on leaving Inactive participants into employment, or job search on leaving 19% 16% 29% 1 The output targets reflect those prescribed by Government and are under negotiation. The latest definitions of ERDF outputs can be found at

51 Employment and inclusion

52 Employment and 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 across the country. 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. We will support people on their journey to reach their potential, particularly those facing multiple and complex barriers such as age, race, gender and disability. Increasing employment Recognising that employment is the key route to combating poverty and exclusion. Unemployment in the area remains relatively high and employment low in comparison to other areas. This holds back both economic growth and reduces social inclusion. Activities to improve employment, employability skills and opportunities for self-employment are essential. Our aspiration is to support growth by enabling everyone to reach their potential and meeting the needs of key industries. The employability and inclusion programme aims to build on our recent progress in productivity and employment growth, to continue these trends and ensure that no one is left behind. We will achieve this by addressing high levels of youth unemployment, with a particular focus on year-olds; reducing inequalities by addressing multiple and complex barriers compounded by race, disability, age and gender; improving economic wellbeing and by ensuring that growth is inclusive and assists those most distant or disadvantaged in the labour market and areas of persistent and entrenched deprivation. The overall approach to the use of ESF invested in employability is to support and add value to existing mainstream programmes by enhancing and addressing gaps in local initiatives and national programmes to ensure individuals receive the support they need to progress into sustained employment. Promoting and supporting inclusion Ensuring no one is left behind, providing targeted and tailored support to neighbourhoods and groups facing major challenges in accessing training and employment opportunities that let everyone fully share in the benefits of a growing economy. Economic prosperity is built by supporting everyone through their journey towards, into and progressing in work or economic activity boosting engagement and productivity. We will achieve a balanced approach through a complementary inclusion programme that provides targeted and focussed support for those furthest away from the labour market to move towards or into learning and work. This will focus on addressing complex and multiple challenges and supporting progression into skills activities undertaken as part of the Priority Axis 2 Skills interventions. This covers - Equal Access to Lifelong Learning and Improving Labour Market Relevance of Education and Training Systems.

53 The North East LEP Area Also Faces Employment And Inclusion Challenges 98,200 SELF EMPLOYED PEOPLE IN WHOLE OF NORTH EAST (7.3%) 883,900 People In Employment 69.4% YEAR OLDS GB NATIONAL AVERAGE: 73.4% (Oct 14 Sept 15) 350,000 EMPLOYED BY SME BUSINESSES IN WHOLE OF NORTH EAST (60% of total private sector business employment) Lower Employment Outcomes for Certain Groups Including women, black and minority ethnic people, under 25 year olds, over 50s and people with disabilities. Employment GAP of those with a long term condition NE 11%; England 8.7% (worse than national average) Employment GAP of those with a learning disability NE 61.6%; England 65% (better than national average) Employment rate of those 50-64, 63.7% Oct 14 Sep 15 June 15 v s overall employment rate 69.3% Levels of Deprivation Comparatively High The 2015 IMD continues to demonstrate higher levels of deprivation in the North East LEP area. The North East LEP overall is the 9 th most deprived partnership area (out of 39) with all seven local authorities in the most deprived 50% and 4th in the most deprived 25%. A similar pattern was evident in the 2010 IMD figures. Higher than average levels of those not in employment, education or training (NEET) year old 6.7% North East LEP % England Average 310,400 PEOPLE INACTIVE 25.1% of Working Age Population GB National Average: 22.3% 22.6% CHILDREN IN POVERTY (dependents aged under 20) (18.6% England) 11.8% in fuel poverty, England average 10.4% School readiness: % of children achieving good development at the end of reception year NE 55.8%; England average 60.4% 7.6% Gateshead 7.3% Sunderland 6.7% Durham

54 INCREASING EMPLOYMENT Durham 23.7m Tyne and Wear Northumberland 33.1m --- PROMOTING AND SUPPORTING INCLUSION Opt-ins There are two main routes to get ESF activity underway: these are opt-ins and open calls. An opt-in arrangement is a mechanism to bring together ESIF funds with key match funding sources from national organisations with large scale programmes and delivery. The North East has chosen to accept the opt-in offer from all three co-financing organisations for ESF Department for Work and Pensions (DWP), the Skills Funding Agency (SFA) and the Big Lottery Fund. DWP and the SFA will use their existing mainstream programmes to match against ESF, while Big Lottery Fund will provide additional cash match, which will form part of the overall project, from their own resources. In all cases applicant organisations can bid for 100% funding. The SFA will use their significant budgets for mainstream learning and skills delivery, including Apprenticeships, and vocational provision, as match for ESF activities targeted at improving the skill levels of individuals, enabling them to progress into employment, or to a higher skill level once in employment. DWP will use their significant budgets for existing eligible mainstream provision for as match for ESF activities targeted at supporting individuals to progress towards or into employment In the North East LEP area, the Big Lottery Fund s Building Better Opportunities programme will provide 9m of its own money over a three year period, to match against 9.5m 1 of ESF resources. Activity will be primarily targeted on unemployed and inactive beneficiaries that are furthest away from the labour market. There may also be some provision to support individuals in low paid employment. It will address the four core social inclusion themes of: Multiple barriers to employment Health inequalities Digital inclusion Financial inclusion Durham 8.8m Tyne and Wear Northumberland 22.1m Open calls Big Lottery Fund will award grants to delivery partnerships, with the minimum grant award being 2m, and the maximum 10m. Open calls are the most common mechanism for accessing European Structural and Investment Funds - for ESF, due to the scale of the opt-in activity proposed, this represents a smaller, but still significant proportion of the overall programme. Open calls are published regularly on.gov.uk targeted at different elements of the programme seeking partners to come forward with project ideas and match funding. These will be assessed by the Managing Authority and advised by the North East LEP area ESIF Sub- Committee. 1 Up to 5% ( 450,000) will be top-sliced off the ESF allocation to cover Big Lottery Admin costs; the exact percentage will depend on the expenditure to be defrayed.

55 1.1 ACCESS TO EMPLOYMENT FOR JOB SEEKERS AND INACTIVE PEOPLE Under priority area 1.1: Durham 5.7m Tyne and Wear Northumberland 26.4m The need Despite significant improvements in the decade prior to the economic downturn, employment remains lower than in similar areas. Recent employment statistics demonstrate that employment has now risen beyond 2008 levels, and that there are more people in employment in the North East than ever before. Nevertheless economic activity rates and employment levels remain low and activities to improve employment, employability skills and opportunities for self-employment are therefore essential. Individuals face a range of complex and multiple barriers to employment which are highly context-specific including physical and digital connectivity, cost and availability of appropriate training to develop relevant skills, capabilities and qualifications, and access to finance. These issues, combined with limited work experience opportunities, can result in low levels of confidence and work readiness. Similar challenges around poor physical and mental health and digital skills also act as major barriers. The impact and interplay of each of these is complex and varies for each individual resulting in the need for a person centred approach to support progress towards and into work. These factors, although widespread, are particularly visible and concentrated for individuals with particular characteristics resulting in disproportionally poorer job outcomes including those who: are Employment Support Allowance claimants are aged 50+ have a physical or mental health condition or disability live in a deprived area are longer term unemployed (including Work Programme completers) are from a BME background are women. Jobseekers and inactive people with these disadvantages are less likely to be able to benefit from local jobs growth and need additional support. Local research indicates those with multiple barriers to work need more intensive and specialist support through integrated service approaches. Actions supported Providing access to labour market, programmes of engagement & employability skills provision supporting unemployed/inactive to participate in activities leading to sustainable employment, including apprenticeships. To include locally responsive and intelligent Information, Advice and Guidance service. Support for individuals with health issues, including mental health, target groups and interventions tailored to individuals with protected characteristics. Support individuals completing work programme but are not in employment. A Variety of mechanisms will be utilised to ensure that funding is deployed effectively; open calls and opt-ins with SFA, DWP

56 Allocation Durham 5.7m Tyne and Wear, Northumberland 26.4m Outputs O1 CO01 CO03 O4 O5 CO16 O6 CO14 Participants (54% men, 46% women) Unemployed, including long-term unemployed Inactive Participants over 50 years of age Participants from ethnic minorities Participants with disabilities Participants without basic skills Participants who live in a single adult household with dependent children 6,600 4,620 1,650 1, ,850 1,160 1,000 O1 CO01 CO03 O4 O5 CO16 O6 CO14 Participants (55% men, 45% women) Unemployed, including long-term unemployed Inactive Participants over 50 years of age Participants from ethnic minorities Participants with disabilities Participants without basic skills Participants who live in a single adult household with dependent children 36,650 25,650 9,160 8,430 1,810 12,600 6,450 4,730 Results R1 R2 R3 R4 CR06 Unemployed participants into employment (including self-employment) on leaving Inactive participants into employment, or job search on leaving Participants gaining basic skills Participants with childcare needs receiving childcare support Participants in employment, including selfemployment, 6 months after leaving 22% 33% 4% 36% 34% R1 R2 R3 R4 CR06 Unemployed participants into employment (including self-employment) on leaving Inactive participants into employment, or job search on leaving Participants gaining basic skills Participants with childcare needs receiving childcare support Participants in employment, including selfemployment, 6 months after leaving 22% 33% 4% 36% 34%

57 1.2 & 1.3 SUSTANABLE INTEGRATION OF YOUNG PEOPLE Under priority area 1.2: Durham 5.2m Tyne and Wear Northumberland 6.7m Under 1.3: Durham 12.8m Tyne and Wear Northumberland 0m The need Actions supported The North East has significant levels of youth unemployment, which has specific impacts at an individual level, including reduced earnings and poorer physical and mental health outcomes, and at a wider level on economic growth and levels of economic inactivity. These issues are more pronounced in County Durham, with particularly high levels of youth unemployment and those not in education, employment or training (NEET). It should be noted that the figures below will underestimate the scale of the issues as there are significant numbers of year olds who are not claiming benefits and who therefore are not counted in this data: The adjusted figure for year olds not in education, employment or training (NEET) at January 2015 was 1124 (6.6% of the cohort). The Annual Population Survey for the period October September 2014, showed that County Durham had 8,400 unemployed year olds (21% of the population of 40, year olds resident in the county). The Jobseeker s Allowance (JSA) claimant count in County Durham at January 2015 had year olds claiming JSA. This was 4.4% of the resident population of year olds in the county. Employers are often reluctant to recruit a young person, especially if they have been disengaged from education or the labour market, and may need additional support to remain in employment. This can result in long-term compounded disadvantage. The labour market in the North East includes a high level of short-term contracting work, with employers more likely to recruit skilled and experienced staff who require minimum support or training to do the job. To help young people to access employment opportunities, including short-term contracts, additional support may be required to encourage employers to recruit a young person, including for short-term contract work. There has been a reduction in the availability of national support for individuals who are, or who are at risk of becoming, NEET, local systematic support is needed to work with those at risk of becoming NEET and work to drive up opportunities for young people within the SME base. Address gaps in provision for young people aged between that are NEET or at risk of becoming NEET. Youth Employment Initiative to support young people aged who are not in education, employment or training. The focus will be on where the greatest need has been identified: those aged (1.3 - Durham only). A Variety of mechanisms will be utilised to ensure that funding is deployed effectively; open calls and opt-ins with SFA

58 Allocation Durham 18m Inc. 12.8m for Youth Employment Initiative (YEI) Tyne and Wear, Northumberland 6.7m Outputs O2 CO01 CO03 O5 CO16 O6 CO14 YEIO8 YEIO3 YEIO9 YEIO10 YEIO11 O5 YEIO12 YEIO13 Participants (below 25 years of age) who are unemployed or inactive (54% men, 46% women) Unemployed, including long-term unemployed Inactive Participants from ethnic minorities Participants with disabilities Participants without Basic Skills Participants who live in a single adult household with dependent children Participants (below 25 years of age) who are unemployed OR inactive (not in education or training) 53% male, 47% female Participants (aged 25-29) who are unemployed OR inactive (not in education or training) Unemployed (including long term unemployed) participants (YEI) Long-term unemployed participants (YEI) Inactive participants not in education or training (YEI) Participants from ethnic minorities Participants with disabilities (YEI) Participants who live in a single adult household with dependent children (YEI) 6,070 4,240 1, , ,370 1,460 4,370 1,460 1, O2 CO01 CO03 O5 CO16 O6 CO14 YEIO8 YEIO3 YEIO9 YEIO10 YEIO11 O5 YEIO12 YEIO13 Participants (below 25 years of age) who are unemployed or inactive (54% men, 46% women) Unemployed, including long-term unemployed Inactive Participants from ethnic minorities Participants with disabilities Participants without Basic Skills Participants who live in a single adult household with dependent children Participants (below 25 years of age) who are unemployed OR inactive (not in education or training) 53% male, 47% female Participants (aged 25-29) who are unemployed OR inactive (not in education or training) Unemployed (including long term unemployed) participants (YEI) Long-term unemployed participants (YEI) Inactive participants not in education or training (YEI) Participants from ethnic minorities Participants with disabilities (YEI) Participants who live in a single adult household with dependent children (YEI 9,460 6,620 2, ,030 1, Results R3 R5 CR06 YEI CR01 YEI CR02 YEI CR03 Participants gaining basic skills Participants (below 25 years of age) in employment, including self-employment, or education/ training upon leaving Participants in employment, including self- employment, 6 months after leaving Unemployed participants who complete the YEI supported intervention Unemployed participants who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Unemployed participants who are in education/training, gaining a 4% 43% 34% 70% 48% 48% R3 R5 CR06 YEI CR01 YEI CR02 YEI CR03 Participants gaining basic skills Participants (below 25 years of age) in employment, including self-employment, or education/ training upon leaving Participants in employment, including selfemployment, 6 months after leaving Unemployed participants who complete the YEI supported intervention Unemployed participants who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Unemployed participants who are in education/training, gaining a qualification, 4% 43% 34% 0 0 0

59 YEI CR04 YEI CR05 YEI CR06 YEI CR07 YEI CR08 YEI CR09 YEI CR10 YEI CR11 YEI CR12 qualification, or in employment, including self-employment, upon leaving Long-term unemployed participants who complete the YEI supported intervention Long-term unemployed participants who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Long-term unemployed participants who are in education/training, gaining a qualification, or are in employment, including self-employment, upon leaving Inactive participants not in education or training who complete the YEI supported intervention Inactive participants not in education or training who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Inactive participants not in education or training who are in education/training, gaining a qualification, or are in employment, including self-employment, upon leaving Participants in continued education, training programmes leading to a qualification, an apprenticeship or a traineeship six months after leaving Participants in employment six months after leaving Participants in self-employment six months after leaving 60% 38% 38% 60% 32% 32% 15% 30% 3% YEI CR04 YEI CR05 YEI CR06 YEI CR07 YEI CR08 YEI CR09 YEI CR10 YEI CR11 YEI CR12 or in employment, including self-employment, upon leaving Long-term unemployed participants who complete the YEI supported intervention Long-term unemployed participants who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Long-term unemployed participants who are in education/training, gaining a qualification, or are in employment, including self-employment, upon leaving Inactive participants not in education or training who complete the YEI supported intervention Inactive participants not in education or training who receive an offer of employment, continued education, apprenticeship or traineeship upon leaving Inactive participants not in education or training who are in education/training, gaining a qualification, or are in employment, including self-employment, upon leaving Participants in continued education, training programmes leading to a qualification, an apprenticeship or a traineeship six months after leaving Participants in employment six months after leaving Participants in self-employment six months after leaving

60 Under priority area 1.4: Durham 7m Tyne and Wear Northumberland 15.1m The need Actions supported 1.4 ACTIVE INCLUSION Within the North East s growing economy, there remain areas of disadvantage for individuals and communities. As the recovery strengthens, it is likely that those already closest to the labour market will find it easier to find work, but there is a risk that the most disadvantaged will be left behind and find it increasingly difficult to compete effectively for work. To ensure that these disadvantaged groups are provided with the right level of support tailored to the needs of individuals and businesses in local labour markets, specific action is needed that can be delivered in a way that is accessible and relevant. Some groups are already well catered for through national programmes e.g. all long term JSA claimants are provided with help through the work programme. However, those with the most entrenched problems, even if they have access to these programmes, can find it difficult to get the most from them. For these people additional support is needed, which is aligned with and builds on national programmes, so that they are better able to benefit. Activities to help the most disadvantaged groups who are a long distance from the labour market are often best served at a local community level by organisations that are familiar with multiple barriers to economic and social inclusion. Active inclusion will therefore help individuals to overcome multiple and complex barriers to employment including exclusion of groups with protected characteristics and cultural disadvantages, health or mental health issues, support to individuals from deprived backgrounds or facing poverty, basic skills including life skills and digital inclusion. Address multiple barriers to employment for those furthest away from the labour market. Build capacity and support the voluntary and community sector and social enterprises to address multiple barriers to employment. - 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. Addressing long-term imbalances in key sectors e.g. gender imbalances through a package of reinforcing measures across schools, colleges, universities and employers to provide a strong challenge to sectoral stereotypes. Specific and tailored support to address additional imbalances, including access for vulnerable groups, deprived areas etc, in training and employment in key sectors including those STEM related. All activities will facilitate access and progression to mainstream provision. A Variety of mechanisms will be utilised to ensure that funding is deployed effectively; open calls and opt-ins with SFA and BIG Lottery. Allocation Durham 7m Tyne and Wear, Northumberland 15.1m Outputs O1 CO01 CO03 O4 O5 CO16 Participants (52% male, 48% female) Unemployed, including long-term unemployed Inactive Participants over 50 years of age Participants from ethnic minorities Participants with disabilities 4,220 2,200 1, ,140 O1 CO01 CO03 O4 O5 CO16 Participants (53% male, 47% female) Unemployed, including long-term unemployed Inactive Participants over 50 years of age Participants from ethnic minorities Participants with disabilities 9,560 5,040 3,850 1, ,130

61 Results CR02 R1 R2 R4 Participants in education or training on leaving Unemployed participants into employment, including self-employment on leaving Inactive participants into employment, or job search on leaving Participants with childcare needs receiving childcare support 17% 14% 27% 36% CR02 R1 R2 R4 Participants in education or training on leaving Unemployed participants into employment, including self-employment on leaving Inactive participants into employment, or job search on leaving Participants with childcare needs receiving childcare support 17% 14% 27% 36% 1.5 COMMUNITY-LED LOCAL DEVELOPMENT Please refer to the CLLD section for full details. CLLD outputs are included below.

62 What will we achieve? Through investments made by the European Social Fund we will deliver the following targets: OUTPUT TARGET Durham Tyne and Wear, Northumberland O1 Participants 10,820 46,210 O2 Participants (below 25 years of age) who are unemployed or inactive 6,070 9,460 O4 Participants over 50 years of age 2,020 10,350 O5 Participants from ethnic minorities 1,250 2,610 O6 Participants without basic skills 2, ESF - CO 01 Unemployed, including long-term unemployed 11,060 37,310 ESF - CO 03 Inactive 4,900 15,380 ESF-CO14 Participants who live in a single adult household with dependent children 1,420 5,190 ESF - CO 16 Participants with disabilities 3,580 16,760 YEI - O3 Participants (aged 25-29) who are unemployed OR inactive (not in education or training) 1,460 0 YEI - O8 Participants (below 25 years of age) who are unemployed OR inactive (not in education or training) 4,370 0 YEI - O9 Unemployed (including long term unemployed) participants (YEI) 4,370 0 YEI - O10 Long-term unemployed participants (YEI) 1,460 0 YEI - O11 Inactive participants not in education or training (YEI) 1,460 0 YEI - O12 Participants with disabilities (YEI) YEI - O13 Participants who live in a single adult household with dependent children (YEI) 250 0

63 Skills for growth

64 Skills for growth Our goal is to develop a flexible and skilled regional workforce that is able to meet the needs of our businesses A skilled workforce is central to sector-led growth and investment in skills will drive the increased productivity of the North East. To support more and better jobs we need to move skills interventions up the value chain, ensuring a supply of appropriate skills is available at all levels. The North East LEP area has strong infrastructure to deliver world-class skills and 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 and the highest number of employers taking on apprentices in the UK. We need local people to be fully aware of job opportunities so we can guide them to appropriate training; we must also up-skill and re-skill those already of working age, creating sustainable employment opportunities for all. Provide skills that progress people in work. Focus on our strengths in apprenticeships to further develop preapprenticeship activity as well as quality apprenticeships at all levels. Ensure a local system that has capacity and capability to address specific skills gaps in workforce. Develop a demand led system that meets employer needs by engaging with businesses and increasing technical, vocational and higher skills. Invest in technical and vocational skills in response to existing needs, skills shortages and emerging demand; created either through new technologies and innovative practice or in response to growth/replacement demand. Invest in people through re-skilling and up-skilling the existing workforce to enable sustainable business growth. Create an appropriately skilled workforce, with a focus on higher level skills, supporting business growth, competitiveness and innovation. Connecting businesses and people by making the education and training system relevant to the North East economy Create an economic intelligence-led approach to future workforce planning For all individuals, especially young people, support better choices by directly linking industry with the curriculum. We will work with employers to build capacity and opportunities for the provision on meaningful encounters with the world of work for those in education at any level.

65 The North East LEP area also faces skills challenges 5 GCSE passes A*-C: 64.2% North East (match national average) 2014/15 5 GCSE passes A*-C including maths and English: 54.4% North East (higher than national average 52.8%) 2014/15 A level passes: % of state funded students aged achieving at least 2 substantial Level 3 qualifications 84.5% North East (lower than national average state funded sector 89.5%) 2014/15. Median annual wage level (all employees): North East LEP region- 20,880 (2015) UK - 22,487 (2015) Apprenticeship data (October 2015) Total starts: North East LEP are 2005/ / / / / / / / / /15 9,870 9,080 12,130 12,520 13,900 26,140 27,170 26,260 22,500 25, ,000 WORKING AGE PEOPLE WITH HIGH LEVEL (LEVEL 4+) SKILLS (2014 DATA) Split by LA below 29% Working Age Population. National Average: 36% Nearly 50% of individuals aged years have achieved NVQ3+ skills by the age of 24. The qualification levels of younger population are increasing, whilst the older population have lower levels skills. The NELEP population aged between years have a higher proportion of lower level skills than the rest of England, such as NVQ3 and NVQ2.

66 THERE ARE TWO MAIN ROUTES TO GET ESF ACTIVITY UNDERWAY: OPT-INS AND OPEN CALLS EQUAL ACCESS TO LIFELONG LEARNING --- Durham 15.4m Tyne and Wear Northumberland 63.2m --- Opt-ins Open calls The need Actions supported An opt-in arrangement is a mechanism to bring together ESIF funds with key match funding sources from national organisations with large-scale programmes and delivery. The Skills Funding Agency will be acting as an opt-in organisation for the skills programme in the North East. The Agency will manage the procurement, performance and payment of contracts for education and training provision and provide the match funding until March Activity not delivered through opt-in arrangements, will be funded through open call arrangements. 2.1 EQUAL ACCESS TO LIFELONG LEARNING The North East LEP area faces key skills challenges that inhibit business growth. These include a low skilled workforce with insufficient numbers of employed people qualified to level 3 and above, and an ageing demographic creating replacement demand particularly within skilled and technical occupations that underpin priority industries. Delivering industry specific, intermediate and higher level skills within the workforce, to new entrants to the labour market and those often out of workis critical but translating this into economic growth depends on North East businesses utilising these skills effectively through high performance working. Investment in leadership and management skills, enterprising behaviours and innovation is necessary to achieve growth. Support skills development for the workforce Develop skills of newly employed, low-skilled, often out of work and those facing or recently made redundant; enabling progress or sustainment in work. Focus on low skilled, tackling barriers to sustained employment. Skills refresh e.g. IT skills/specific qualifications, to address gaps in emerging technologies and replacement demand. Support women to increase skill levels and progress in work, including support for women in non-traditional industries and sectors. Create job growth potential in SMEs by progressing existing employees to higher skills levels. Support for management, leadership & enterprise skills Support skills provision that delivers an increase in business starts targeted at the smart specialisation and growth sectors. To include: entrepreneurial skills development; and training for innovators throughout their academic and business careers. Employer-led skills provision Focused on SMEs in smart specialisation and growth sectors Support for industry specific intermediate and high level skills that respond to employer demand and offer flexible responses to emerging and projected skills needs. Packaged support for companies in inward investment sectors and their supply chains. Skills solutions focused on SMEs in smart specialisation areas and areas of economic advantage. A variety of mechanisms will be utilised to ensure that funding is deployed effectively; open calls and opt-ins with SFA

67 Allocation Durham 15.4m Tyne and Wear, Northumberland 63.2m Outputs O1 O4 O5 CO16 O6 CO14 Participants (49% male, 51% female) Participants over 50 years of age Participants from ethnic minorities Participants with disabilities Participants without basic skills Participants who live in a single adult household with dependent children 16,120 3, ,350 2, O1 O4 O5 CO16 O6 CO14 Participants (49% male, 51% female) Participants over 50 years of age Participants from ethnic minorities Participants with disabilities Participants without basic skills Participants who live in a single adult household with dependent children 81,250 17,980 3,880 8,170 14,300 4,290 Results R3 R6 R7 R8 Participants gaining basic skills Participants gaining level 2 or below or a unit of a level 2 or below qualification (excluding basic skills) Participants gaining level 3 or above or a unit of a level 3 or above qualification Employed females gaining improved labour market status 11% 25% 8% 35% R3 R6 R7 R8 Participants gaining basic skills Participants gaining level 2 or below or a unit of a level 2 or below qualification (excluding basic skills) Participants gaining level 3 or above or a unit of a level 3 or above qualification Employed females gaining improved labour market status 11% 25% 8% 35%

68 2.2 IMPROVING LABOUR MARKET RELEVANCE OF EDUCATION AND TRAINING SYSTEMS IMPROVING LABOUR MARKET RELEVANCE OF EDUCATION AND TRAINING SYSTEMS Durham 2.8m Tyne and Wear Northumberland 13.2m The need Actions supported There is pronounced mismatch between supply and demand in the North East labour market and although many employers actively engage with the education and training system this is often uncoordinated and lacks consistency. Engagement also tends to be with larger companies and SMEs require significant support to navigate education and training, including securing better access to graduates through placements, internships or through hosting graduate projects. Educational attainment and aspiration reduces our potential for growth. We have some of the highest shares of pupils on free school meals who have significantly lower achievement rates than other pupils. Performance at KS2 has been a strength for the North East and it compares well nationally, the latest figures for KS3 buck a longer term issue with achievements dipping for older pupils. Ongoing close working with employers is critical to raising young people aspirations, articulating the realities of the modern labour market and the importance of skills and qualifications. Support for collaborative projects To include placements, internships or other activities enabling students & graduates to gain industry relevant experience & skills to meet current and future employment demands. Enable businesses to engage in skills provision & work directly with education providers to link curriculum with industry Locally relevant activities will align course content with business demand, create increased work placement opportunities and create work-ready, highly skilled employees. Business/educator links for business growth To include support to encourage take up of graduates & highly skilled staff; tackling replacement demand and succession planning leading to increased participation in higher level skills. A variety of mechanisms will be utilised to ensure that funding is deployed effectively; open calls and opt-ins with SFA. Allocation Durham 2.8m Tyne and Wear, Northumberland 13.2m Outputs CO23 Number of supported micro, small and medium-sized enterprises (including cooperative enterprises, enterprises of the social economy) 360 CO23 Number of supported micro, small and medium-sized enterprises (including cooperative enterprises, enterprises of the social economy) 1,440 Results R9 SMEs successfully completing projects (which increase employer engagement; and/or the number of people progressing into or within skills provision) 75% R9 SMEs successfully completing projects (which increase employer engagement; and/or the number of people progressing into or within skills provision) 75%

69 What will we achieve? Through investments made by the European Social Fund we will deliver the following targets: OUTPUT TARGET Durham Tyne and Wear, Northumberland O1 Participants 16,120 81,250 O4 Participants over 50 years of age 3,210 17,980 O5 Participants from ethnic minorities 730 3,850 O6 Participants without basic skills 2,840 14,300 ESF CO14 Participants who live in a single adult household with dependent children 870 4,290 ESF CO16 CO23 Participants with disabilities 1,350 8,170 Number of supported micro, small and medium-sized enterprises (including cooperative enterprises, enterprises of the social economy) 360 1,440

70 European Agricultural Fund for Rural Development - Rural Growth Programme Funding for the North East

71 EAFRD Our goal is to build resilient rural communities with more and better employment opportunities EAFRD resource is enabling the North East to specifically focus upon and stimulate growth in our rural areas through supporting new infrastructure, business collaboration and business led investments that contribute towards building more resilient rural communities. Our target activities are aligned to, and designed to, complement the national Common Agricultural Programme (CAP) funded programmes including the Countryside Productivity Scheme and Countryside Stewardship scheme, Countryside Stewardship. Plus our four North East community led LEADER Programmes. Rural superfast broadband Our rural communities need a level playing field to compete digitally. EAFRD funding is now required to enable the delivery of alternative network solutions, delivering superfast broadband, to less accessible rural locations. Fibre delivery to more remote locations is challenging and costly. Of the market test pilots being rolled out by Broadband Delivery UK (BDUK) as part of a provisional phase three programme, most rely on fixed wireless solutions, with very few offering community-led fibre options. EAFRD aims to enable the learning from the market test pilots to offer innovative solutions, providing a vital superfast broadband connection to our rural businesses and communities Rural business development Through the North East Rural Growth Network (RGN) rural stakeholders are helping to design and co-ordinate rural business support programmes. Experience from the North East Rural Growth Network pilot programme ( ) has shown how a collaborative and integrated approach to business support can help reach out and engage rural businesses. Access to finance remains a barrier for many micro and small businesses and through EAFRD and the North East LEP s RGN Local Growth Fund we will provide a co-ordinated range of business development grants to meet local demand from growing businesses in key sectors. Tourism development Despite having some of the UKs most attractive protected landscapes and rich cultural heritage visitor numbers remain lower than comparable, more well established destinations. Tourism is a particularly important sector in the rural economy, providing opportunities for farm diversification, the creation of new visitor orientated businesses and more generally contributing to the economic viability of services in small communities. The North East Strategic Economic Plan highlights the opportunity for the rural tourism economy to grow by building upon the area s natural environmental, heritage and cultural assets. Key linkages and relationships Broadband rollout BDUK is providing capital funding to local authorities to enable the rollout of superfast (24mbps) and improved basic broadband (>2mbps) to premises in the North East. North East Farming and Rural Advisory Network (NEFRAN) NEFRAN provides an important rural forum and voice for our rural stakeholders, helping to inform rural policies and programmes. It will help raise an awareness of EAFRD project calls. Rural business development The North East LEP is providing Local Growth Funding of 6m over 2015/19 to the North East Rural Growth Network to deliver capital grant support to high growth SMEs and investment in strategic employment sites, enterprise hubs and catalytic tourism projects. Tourism Our partners involved in the County Durham and Northumberland Destination Management Organisations have provided new guidance on the area s tourism investment priorities. This has been subject to consultation and agreed in 2015 with the North East Farming and Rural Advisory Network (NEFRAN) and is now informing our calls for tourism projects. LEADER Programmes Our four community-led LEADER Programmes will invest approximately 8m over in supporting business development, increasing farm and forestry productivity, developing rural tourism, culture and heritage and providing rural services. For further information on the Durham Coast and Lowlands and the North Pennines Dales LEADER Programmes visit: North Pennines and Durham Coast and Lowlands LEADER Programme Northumberland Uplands Northumberland Coast and Lowlands