The D2N2 EU Structural and Investment Funds 2014-2020

The D2N2 EU Structural and Investment Funds 2014-2020

Consultation Document

July 2013

1

BACKGROUND TO THE CONSULTATION

Introduction

The D2N2 Local Enterprise Partnership (LEP) is a partnership with the purpose of delivering economic growth across Derby, Derbyshire, Nottingham and Nottinghamshire. The launch of a new European Programme period, with financial allocations in the region of €250 million to the end of 2020, will make an important contribution to realising the growth aspirations of the D2N2 area over the next ten years.

At a time of continued restrictions on national funding streams, the 2014-2020 Structural and Investment Funds will provide a substantial boost to funding across the UK. The Programme’s potential to deliver physical, economic and social change is considerable and ensuring resources are put to the best possible use is a key priority.

“D2N2 has received a notional allocation of €249.7m European Funding for the period 2014-2020 – one of the largest allocations of all LEP areas in the England. The D2N2 LEP (as with other areas) is required to provide a draft strategy for how the area will use these funds by September 30th”.

Given the importance of these funds, the D2N2 LEP is taking a wide ranging approach to consulting with partners from across the area to ensure that the planned use of the funding meets our growth ambitions, exploits our assets and addresses the challenges faced by our region. We would encourage you to read the following document which provides further context to the D2N2 European funding programme, and also provide your views to assist us in developing this highly important investment plan for the region.

State of the D2N2 Economy

The D2N2 economy is a varied economy employing nearly 900,000 with a GVA of close to £40bn. Outside of the South East, this makes the D2N2 economy the third largest of all of the LEPs in England.

The area’s economy generally performs just less than the English average against a variety of indicators, and is hindered by a smaller than average business base particularly in the private sector. The area however has proved relatively resilient during the economic downturn. Other positives include:

·  The presence of a number of globally recognised companies;

·  Evidence of relative successes in foreign investment and exports;

·  The area’s improving skills base;

·  Growth in key sectors e.g. advanced manufacturing and health and bioscience.

The D2N2 area is also an attractive place to locate a business given its affordable business land as well as competitive wage rates, central location, excellent infrastructure links and high supply of labour.

The area is not without its challenges however. In particular, to close the gap with the UK average and achieve its vision, the D2N2 economy would need to deliver a step change in employment. The D2N2 LEP believes that this is achievable through:

·  Growing and deepening its private sector employment base, particularly in sectors such as knowledge intensive industries (particularly where D2N2 has niche specialisms) and the visitor economy (making use of the area’s natural assets);

·  Maximising the areas untapped potential, particularly in terms of capturing employment growth from its strategic sectors and the low carbon economy;

·  Building on supply chain opportunities linked to major employers and the potential for R&D projects, spin out enterprises and HE collaboration in sectors such as transport equipment and medical / bioscience;

·  Slowing the decline in the area’s manufacturing base by supporting high growth sub sectors, companies involved in advanced manufacturing and continuing to grow the area’s export intensive industries;

·  Making best use of its labour force, including increasing the number of higher skilled residents, addressing recent increases in unemployment particularly amongst those aged 18-24 and developing and depending a culture of innovation across the area;

·  Retaining more graduates in the D2N2 area along with their skills and enthusiasm, and build on existing research strengths, particularly relationships with the local business base;

·  Increasing the number of new businesses and improving the survival rate of smaller businesses to help closing the area’s business density gap;

·  Maximising the area’s potential in FDI arising from factors such as its central location, the arrival of High Speed 2 and the area’s university base; and

·  Maximising the contribution made by D2N2’s smaller market towns, villages and rural areas and the opportunities available to their residents.

“The UK’s Most Inspirational Postcode” - The D2N2 LEP’s Strategy for Growth

In response to economic strengths and challenges faced by the area, the D2N2 LEP is in the process of finalising its strategy for economic growth. This plan is key to making the case for investment in the area to Government, the private sector and others to enable growth and create new jobs. The Growth Plan will enable the area to access funds from the Government’s £20bn Single Local Growth Fund to boost local economic growth, as well as securing additional resources, levers and flexibilities. The plan has a clear vision for the area’s economy, with supporting objectives and six priority sectors.

Whilst the vision is a long term ambition, in the short term the LEP will prioritise investments and infrastructure to accelerate the area’s economic recovery as well as focusing on the development of the skills of our young people and workforce and growth of key sectors to ensure long term self-sustaining growth and prosperity.

All partners in the area have an important role to play – local authorities in delivering local growth plans, higher education institutions have a major role in driving demand, innovation and skills and businesses are the motor of the area’s growth.

In order to close the gap with elsewhere in the UK and achieve the vision, the D2N2 economy will need to deliver a step change in employment, with ambitions to support the creation of 55,000 new and additional jobs in the D2N2 economy by 2023, the majority of which will be in the private sector.

The 2014-2020 Structural and Investment Funds Programme

The current EU Structural and Investment Funds exist to promote sustainable growth and cover four main funds:

·  The European Regional Development Fund (ERDF) – focused on economic development, including funding business support and infrastructure interventions;

·  The European Social Fund (ESF) - which is designed to increase employment opportunities and promote social inclusion and address youth unemployment.

·  The European Agricultural Fund for Rural Development (EAFRD) - supporting inclusive growth in agriculture, food and forestry, and in rural areas;

·  The European Maritime and fisheries Fund (EMFF) – not relevant for D2N2 as it promotes social cohesion in fisheries dependent communities.

These funds are currently managed separately, but for the 2014-2020 funding period they will be aligned, delivered and administered as a single fund - the 2014-2020 Structural and Investment Funds. This will sit alongside the Government’s Single Local Growth Fund. Each Local Enterprise Partnership has been asked to lead the development of a Structural and Investment Funds Strategy which sets out how they will invest the funds. This will form part of the LEP’s wider strategic economic plan, so links to the Growth Plan are important.

As well as setting out the local area’s priorities for spending and planned outcomes, the LEP will have an important role in the delivery of the funds, including identifying which projects to support with local partners, identifying match funding and delivering agreed targets and results for the programme. The 2014-2020 Structural and Investment Fund is based around ten key investment themes under which eligible projects should fall – see the table below.

EU Theme / Examples of potential activities / Funding
1 – Innovation / Collaborative research, commercialising R&D, physical infrastructure e.g. incubation space, workforce skills to support R&D. / At least 80% of ERDF funds on these 4 objectives, including at least 20% on low carbon.
2 – ICT / Roll out of high speed networks, ICT workforce skills, support to assist take up by SMEs.
3 – SME Competitiveness / Finance, exporting support, supply chains, enterprise support, incubation space and support services for high growth businesses.
4 – Low Carbon / Support for low carbon job creation, development of low carbon technologies and supply chains.
5 – Climate Change Adaptation / Adaptation, capacity building, green and blue infrastructure, resource efficiency measures. / No spending minimum
6 – Environmental Protection / Habitat protection, restoration and creation, reducing pollution, managing natural resources.
7 – Sustainable Transport / Improving connections from local transport networks to key gateways, new technologies, localised interventions.
8 – Employment and Labour Mobility / Access to employment for job seekers/inactive people, sustainable integration of young people. / At least 80% of ESF allocation per programme on up to 4 investment priorities within these themes.
9 – Social Inclusion / Improving employability, flexible support, tackling barriers to work, inclusion and outreach.
10 – Education, skills, lifelong learning / Enhancing access to lifelong learning, upgrading workforce skills, improving vocational education, work based learning and apprenticeships.

Initial funding allocations by LEP areas were recently announced, and D2N2 is anticipated to receive in the region of €250m which is the eighth largest allocation of the 39 English LEPs. A key thing to note about the funds is that individual projects have to be ‘matched’, typically on a 1:1 ratio. Some of this match funding will come from Government, but also the private sector as well as local partners. Around half of the budget will be allocated to ESF activities in more developed regions

The EU is clear that grassroots and community based programmes are also important. For the 2014-2020 period, there will be an important role for the civil society sector and ‘Community Led Local Developments’ can also be formed where local action groups would develop and implement a local development strategy with the assistance of some of the funds. The Government would also like to see LEPs working with each other to deliver a bigger impact where possible e.g. where investments are appropriate across LEP areas.

Some examples of projects funded through the last European programme in the D2N2 area include support for the food and Drink i-Net, Nottinghamshire Business Venture and a number of innovation projects linked to the area’s Universities.

The potential European funding allocation of circa €250m can play a significant role in helping D2N2 with its ambitions to become more resilient, prosperous and competitive economy.

The D2N2 LEP is clear that these funds should:

·  Cover the whole of the D2N2 area;

·  Deliver the D2N2 Growth Plan and its four core priorities; and

·  Promote:

o  flexibility, speed, delivery focus and efficiency in deploying funds across the EU thematic objectives;

o  a blend of collaborative, LEP wide and more local approaches to deliver better outcomes

o  an active role for D2N2 in the management of the programme.

Whilst EU funding brings with it some complexities, eligibility issues and constraints, there is a close match between its core investment themes and the area’s strategic priorities. Ensuring that the real issues facing the area are reflected in the development of D2N2’s EU Structural and Investment Fund Strategy is therefore vital. Your observations and suggestions here are particularly welcome.

Development of the Plan

D2N2 must submit a draft EU Investment Strategy by the end of September, with the final sign off in January 2014. It will be important for the strategy to:

·  Clearly articulate the case for intervention;

·  Provide an overarching strategy for European investment and identify arrangements to underpin this;

·  Demonstrate the role of a range of partners in developing/delivering the strategy;

·  Set out a credible, eligible and deliverable pipeline of projects.

Recognising the need to get the strategy right for local businesses and residents and the need to comply with national and European guidelines, there will be a focus on engaging with a wide range of local partners through a thorough and substantive engagement process to ensure that the final investment proposals reflect local needs and have strong support. Consequently we will be hosting a number of consultation events and workshops over the next few months. We are also keen to gain the views of partners through the completion of the attached consultation questionnaire.

The Consultation Questionnaire

We are interested in your views on the D2N2 EU programme for 2014-20, as well as your experience of the last EU programme (if you were involved) and the lessons we can learn to ensure the success of the 2014-2020 programme.

1.  The potential investment themes of the programme;

2.  The balance of funding by theme, match funding and financial instruments;

3.  How the programme should be managed in D2N2;

4.  Approaches to monitoring, evaluation and review; and

5.  Other comments.

We recognise that not all sections of the questionnaire will be relevant to you – please just complete those that you can. If you have had very little involvement in the funds and just want to make a short submission just go to section five (other comments) of the form. Also please feel free to pass the survey on to other interested parties, and advertise it as appropriate. The questionnaire can either be returned to a D2N2 representative at any consultation events which you may attend or by post or email to:

Matthew Wheatley, Co-ordinator, D2N2 Local Enterprise Partnership, 8 Experian Way, Nottingham, NG2 1EP. Email: Tel: 0115 957 8744

Should you prefer, the questionnaire is also available for completion online:

https://www.surveymonkey.com/s/D2N2EUStrategy2014-20

In order to ensure that your comments are reflected in the first draft of the programme, we would be grateful if you could complete the questionnaire by Friday 23rd August. If you complete the survey after this date though, we can still incorporate your views.
CONSULTATION DOCUMENT

Section 1: Investment Themes

Overview
The EU guidance has identified 10 investment themes of relevance to D2N2 as follows:
ERDF Themes 1-7: 1. Innovation, 2. ICT, 3. Enhancing the competitive of small and medium sized enterprises, 4. Low carbon, 5. Climate change, 6. Protecting the environment and promoting resource efficiency, 7. Promoting sustainable transport,
ESF: Themes 8-10: 8. Promoting employment and supporting labour mobility, 9. Promoting social inclusion and combating poverty, 10. Investing in education, skills and lifelong learning.
The programme also has a number of cross cutting issues – Gender equality, equal opportunities and non discrimination; sustainable development; and social innovation (relating to the ESF themes and involving testing and scaling up innovative products, services or models to address unmet social needs).
There are some rules about how allocations should be spent:
(a) at least 80% of ERDF must be spent on the first four themes, with at least 20% spent on Low Carbon.
(b) at least 52% of funding towards ESF activities, with 80% of ESF to be spent on four investment priorities within these 3 themes.
This still leaves some scope for allocations between priorities and we are seeking views on how funding should be apportioned within these parameters, as well as the investment opportunities and priorities for D2N2 under each theme.
The new programme also encourages areas to collaborate across geographies where this delivers the best outcomes. For example two Local Enterprise Partnerships might collaborate on a shared priority such as pharmaceuticals, or neighbouring Local Enterprise Partnerships might work together to allow larger-scale strategic investment.

Key Questions