North East European Structural and Investment Funds Update workshop – November 2014

1. North East European Structural and Investment Funds Update workshop – November 2014

2. North East Local Enterprise Partnership The Strategy

3. Context: Strategic Economic Plan An Agenda for Growth - “more and better jobs” – with clear vision, objectives and actions Substantial investment proposals Basis for a Growth Deal for the area, including the Local Growth Fund EuropeanStructural & Investment Funds Strategy delivers on local aims

4. Economic context Employment rising (NE)- Jul-Sep 2014, 27,000 more employed than Jul-Sep 2013 Labour productivity (GVA per hour worked) growing at fastest rate in the country GVA per head growing among highest rates in the country 79% of jobs in the area provided by the private sector (72% in 2009) Still shortage of private sector jobs to provide a balanced and sustainable economy. The challenge is not just the number of jobs but the quality of these jobs. Educational achievement has been on a steady rise since 2000 - but need to increase volume of higher level skills

5. Vision and objectives By 2024 our economy will provide over one million jobs Halve the gap between the North East and the national average (excluding London) on: • Gross value added (GVA) per full time equivalent (FTE) • Private sector employment density • Activity rate Fully close the gap on employment rate, • Scale and quality of employment matching an increasingly better qualified and higher skilled workforce.

6. Strategic Economic Plan Theme • Innovation • Business support and access to finance • Skills • Employability and inclusion • Economic assets and infrastructure • Transport and digital connectivity

7. European Structural and Investment Funds Local enterprise partnerships were asked to develop ESIF strategy responding to local needs • European Regional Development Fund • European Social Fund • European Agricultural Fund for Rural Development • Youth Employment Initiative

8. Split of ESIF in North East by fund, £m

9. Split of ESIF in North East by fund & area £m

10. ERDF £m

11. ESF £m

12. Innovation (£53.2m) Creating competitive advantage; open innovation, smart specialisation Building collaborative research between enterprises, research institutions and public institutions Bringing new products and business processes to the market, including those linked to ‘key enabling’, the ‘eight great’ and health science technologies Development of innovation space to support commercialisation of research and development

13. SME competitiveness (£112.1m) A2F for SMEs to support growth and innovation Provide coordinated business support Support the development of strategic sites Broadband infrastructure (Durham, £4m) Address broadband funding gap and ensure opportunities for growth through digital connectivity are exploited

14. Low carbon and green infrastructure (~£75m) • Sustainable Growth Study • Built Environment and Business Energy Efficiency • Low Carbon Supply Chains • Innovative Technologies and Renewable Energy Generation • Green Infrastructure Improvements • Sustainable Urban Development

15. ESF • Inclusive growth study • ESF and Opt-ins- match provided, process managed Employability (£53.3m) • Provide additional and more intensive support to help people develop the skills and aspirations needed to move towards work, enter work and to progress into work • Help older workers, workless people and those facing redundancy to upgrade their skills, learn new skills or re-train to enter, re-enter or stay engaged with the labour market and adapt to new market conditions • Young people- Northumberland and Tyne and Wear/Durham Social inclusion (£44.5m) • Tackle multiple barriers • Support for those with protected characteristics • CLLD

16. Skills (£113.6m) Support for intermediate, technical and high level skills and studentships especially linked to areas of economic advantage Support collaborative projects, placements, internships Support for activities to start and grow a business Better links between businesses and educators

17. EAFRD (£10.5m*) Rural Business Growth Fund, Strategic Economic Infrastructure Tourism LEADER Durham Coast and Lowlands; North Pennine Dales; Northumberland Coast and Lowlands; Northumberland Uplands

18. Financial instruments JEREMIE: Current JEREMIE now to 2015 end. North East LEP and TVU working together to deliver £160m fund from 2016 Online survey here: http://survey.panelbase.net/start/chk.asp?jn=P6336&es=1&src=nea2f NEIF: Recognising benefits of loan-based funds to meet infrastructure needs. To consider best deployment of ERDF, ex-ante evaluation to support market assessment will help determine scope and demand

19. Application process (ERDF, ESF) Call published after specification designed locally, applicants prepare and submit outline application Calls will address a specific local need or opportunity and fit one priority or thematic objective Some will stipulate single award/defined number of awards and budget Outline application assessed strategically, and also by MA on gateway criteria and core selection Need to ensure eligible match, meeting outputs, value for money Local committee recommends which projects proceed to full application and makes final endorsement

20. Timescales 2014 December: First meeting of LSC 2015 Early 2015: LEP to run thematic workshops Early- mid 2015: National Operational Programmes signed off Local Implementation Plan finalised incl. local specs Calls for projects

21. Questions?

22. European Structural and Investment Funds Growth Programme 2014 to 2020 22

23. Please note that these slides are based on the position of the proposed operational programme at time of publication. This is likely to change in response to further discussions with the European Commission. 23

24. Some key differences from last time Stronger links with EU strategy Greater focus on results Tougher performance framework Ex-Ante Conditionalities to ensure more effective spend Strengthened partnership principle and LEP area allocations National Operational Programme ERDF

25. Strategic Context Europe2020 National reform programme/ relevant CSR Common Strategic Framework Partnership Agreement Programmes Projects

26. Operational Programmes Thematic Objectives Europe 2020 Investment priorities Programme strategy Specific objective Development needs Expected results Outputs

27. ERDF and ESF OPs • UK Allocation ERDF:ESF => EUR 11bn • Growth Programme in England made up from individual ESIF Operational Programmes: • ERDF England => EUR 3.6bn • ESF England => EUR 3.3bn • EAFRD (RDP) => cEUR 215m (£177m) • ERDF:ESF in England c63% of UK allocation • England level ESF/ERDF Operational Programmes covering all 3 Categories of Region • OPs implemented via ESIFs and notional allocations at LEP area partnership level 27

28. European Regional Development Fund 2014 to 2020Operational Programme Structure ERDF Priority Axes Priority axis 1: Research & innovation (Investment Priority 1b) Priority axis 2: Enhancing access to, and use and quality of, ICT (IP 2a / 2b) Priority axis 3: Enhancing the competitiveness of SMEs (IP 3a/3c/3d) Priority axis 4: Supporting the shift towards low carbon economy in all sectors (IPs 4 a-f) Priority axis 5:Promoting climate change adaptation, risk prevention and management (IP 5b)

29. European Regional Development Fund 2014 to 2020Operational Programme Structure Section 2: ERDF Priority Axes Priority axis 6:Preserving and protecting the environment and promoting resource efficiency (Investment Priority 6d/6f) Priority axis 7: Sustainable transport in Cornwall and IoS (IP 7a / 7c) Priority axis 8: Sustainable transport in transition regions (7b/7c) Priority axis 9: Promoting social inclusion and combating poverty and any discrimination (IP 9d) Priority axis 10: Sustainable urban development (14 IPs /18 Specific Objectives/Results)

30. European Social Fund Operational Programme 2014 to 2020 3. Priority Axes 30

31. European Social Fund 2014 to 2020Operational Programme Structure Priority Axis 1 - Employment Access to employment for jobseekers and inactive people Sustainable integration of young people Sustainable integration of young people (Youth Employment Initiative) Active inclusion for the most disadvantaged groups Community Led Local Development Two Thematic Objectives (TO8 / 9) 3 Categories of Region

32. European Social Fund 2014 to 2020Operational Programme Structure • Priority Axis 2: Skills • Access to lifelong learning: improving the skills of individuals • Labour market relevance: making skills provision more responsive to the needs of the local economy One Thematic Objective (TO 10), 3 categories of region 32

33. European Social Fund 2014 to 2020Operational Programme Structure • Priority Axis 3: Technical Assistance • MA staff costs • Costs of national MA and opt-in activity (e.g. IT, evaluation, comms) • National partner activity • Local partner activity • 3 categories of region 33

34. European Social Fund 2014 to 2020 • Delivered via CFOs • Opt-in-Organisations • Skills Funding Agency • DWP • Big Lottery Fund • NOMs (top slice) • Youth Employment Initiative • 70% Opt-in / 30% open bidding 34

35. Next Steps • Partnership Agreement submitted April / agreed October – significant issues of detail on implementation and governance to be addressed in individual Operational Programmes • ESF / ERDF OPs submitted summer EU Commission comments received and negotiations underway • From ESF point of view – EU challenges: • More about reducing gender employment rate gap and gender pay gap • Clarity on supporting childcare when it’s a barrier to participation • Scepticism on HL skills require it to be focused and not about participation • Prioritise lower level skills • Relationship between specific objectives, results and outputs (EU after more targets / disaggregation / customer characteristics) • Governance model 35

36. Next Steps • From ERDF point of view – challenges include: • Governance and Business Process • Role of partners and Managing Authorities (GPB / national committees / local sub-committees) • Resources and ex-ante conditionalities • Coherence of investment strategies at Priority Axis level • Concentration of resources • Integrated territorial instruments (CLLD/SUD/ITI) • Broadband (justification and criteria for capital infrastructure investment) • Business Incubators (ECA) • Smart Specialisation Strategies (feasible at local level?) • More information on coordination of business support services 36

37. Next Steps Government formal response to EU Commission Comments Formal negotiations with relevant Directorates General Revised OP and informal agreement first quarter 2015 Informal launch of ESIF England Growth Programme from March / April 37

38. Questions?

39. Rural Funding - EAFRD

40. Workshops • Identifying project pipelines • Understanding the impact • Feedback – Challenges and next steps