Agenda item

Report of the Director of Regeneration and Economic Development –

presented by the Managing Director, Business Durham

The Chairman thanked the Managing Director, Business Durham (BD), Dr Simon Goon who was in attendance to speak to Members in relation to Business Support and the Role of Business Durham (for copy see file of minutes).

The Managing Director, BD noted that report as set out within the agenda papers built upon previous reports to the Committee and noted that areas such as retail which was very dynamic, and tourism which was dealt with primarily by VCD, were not the main areas of focus for BD as it was felt a lot of effort could be expended for little visible result.  Members noted that the focus of BD was on supporting private sector job creation in the areas that have the greatest benefit to the economy including sectors such: manufacturing; professional services; creative services; scientific and technical services; and production. 

The Committee were informed that BD operated 3 teams that supported businesses those being:

·       The Business Space Team that manages the Council’s business property, with an aim to eventually be able to fully fund the rest of the services being delivered by BD.

·       The Innovation and Growth Team that oversees inward investment, strategic management, the innovation agenda and NETPark product.  It was added that the “top 1%” of businesses employs 17% of all employees therefore a small change in their employment figures can have large impact.

·       The Business Development Team that leads on enterprise activities for the County, working with Enterprise Agency partners in areas such as supporting Small and Medium sized Enterprises (SMEs) to expand.  It was noted this was carried out in the usual East, North and South and West geographical areas of the County.

The Managing Director, BD noted that BD had 4 principle objectives: deliver financial sustainability; become more proactive in engaging with business and sector development activities; operate more effective and efficient networks within and out of the County; and establish a greater evidence base to inform strategy development and measure impact.

Councillors noted six principle areas of activity, those being:

·       Encouraging a more entrepreneurial culture.

·       Encouraging the growth and development of SMEs.

·       Supporting larger companies.

·       Attracting capital and inward investment to the County.

·       Encouraging and supporting the development of innovative, technology based SMEs.

·       Maximising the benefit of the County Council’s stock of business property.

Members noted entrepreneurial activities included initiatives with schools, colleges and Durham University, and the Future Business Magnates (FBM) enterprise competition.  It was also noted there had been support of the Peter Jones Enterprise Academy at East Durham College, and support on behalf of the County Durham Economic Partnership (CDEP) in respect of “Durham Creatives”, workshops, coaching and mentoring which has resulted in 27 start-ups so far.  The Committee learned that the project of support for NETPark, originally Project C, had been rebranded as NETPark Brainwave and in total, 40,000 people had been engaged, with activities including work with local school teachers regarding the science of the Lindisfarne Gospels and work with the firm Artichoke in respect of the science of light to help inspire young people. 

The Managing Director, BD explained that during 2012/13 there had been: a total of 769 enquiries, with 130 being start-up enquiries passed on to Enterprise Agencies; 252 businesses being provided with assistance; and 275 businesses being engaged through specific events, projects and campaigns.  Members noted that to date, the 2013/14 figures were a total of 429 enquiries; 54 start-up enquiries passed on to Enterprise Agencies; 112 businesses being provided with assistance and 139 businesses being engaged through specific events, projects and campaigns.  The Committee noted that a number of business engagement groups had been established for the major industrial estates at Aycliffe, Peterlee and Consett and that a Social Value Taskforce had been established to help small businesses win more contract opportunities with this Taskforce to be chaired by Councillor N Foster.  Members noted that the Social Value Taskforce included representatives from the Federation of Small Businesses (FSB), the North East Procurement Organisation (NEPO), Social Enterprise UK, Price Waterhouse Cooper and experts on social accounting.

Members were referred to a list of many large companies that had been supported by Business Durham which included: EBac, the only white goods manufacturer in the UK: Thorn where jobs were saved; and Polyphotonix a company working in connection with Organic Light Emitting Diodes (OLEDs). 

The Managing Director, BD explained that there were challenges in respect of Regional Growth Fund (RGF) and there were several examples of successful bid to Round 3 of RGF including:

·       Actem (UK) at Peterlee, a £5.3 million investment, £1.3 million from RGF, 40 new jobs.

·       Caterpillar at Peterlee, a £11.3 million investment, £1.2 million from RGF, 25 new jobs, 175 safeguarded jobs.

·       CAV Aerospace at Consett, a £8.3 million investment, £1.4 million from RGF, 78 new jobs, 105 safeguarded jobs.

·       Ebac Group at Newton Aycliffe, a £7 million investment, £1 million from RGF, 100 new jobs.

·       NSK Bearings Europe at Peterlee, a £23.5 million investment, £3.5 million from RGF, 40 new jobs.

It was added that there was support offered to those businesses trying to access the “Let’s Grow” a £30 million RGF programme and noted that for an investment of £24,000 by Durham County Council (DCC) in supporting bids, £6.5 million of grant was secured, in turn creating and safeguarding 667 jobs.  Councillors noted several capital investments including the Hitachi Rail Europe project and Compound Photonics, a high value manufacturing company that specialises in video and data projection.  It was noted that these investments would lead to 200 jobs being created or safeguard, with the potential for another 50 jobs to be created.

The Committee noted that innovative technology based SMEs were encouraged with the NETPark Net membership model, NETPark Net Virtual Office and a rebooted NETPark Net Innovation Academy.  It was explained that the latter seen as an example of best practice, showcased at the International Association of Science Park’s conference in Tallinn, Estonia in June 2012.  It was added that in July 2013 the inaugural meeting of the NETPark Investment Panel was held, to help connect companies to financiers and to assist with investor readiness.  Members noted that BD was approached by the Science and Technology Facilities Council (STFC) in order to organise an event showcasing the contracts available from the European Extremely Large Telescope which is being constructed in Chile for the European Southern Observatory.

The Managing Director, BD commented that in maximising the benefit of DCC business properties the Authority had taken a more aggressive position as regards rents and debts, and with several businesses moving from DCC premises to either larger premises elsewhere or downsizing operations and working from home.  It was explained that a further phase of development of the Derwentside Business Centre had just been completed at Consett Business Park, on time and to budget.  Councillors noted huge successes at NETPark in terms of occupancy, with levels at 83% currently with it expected to rise to over 90% with a major letting anticipated before Christmas 2013.  Members noted that NETPark was projected to make a net contribution of £315,000 to BD by the end of March 2014.

The Chairman thanked the Managing Director, BD and asked Members for their questions on the report.

Councillors asked questions relating to: how inward investment was directed since the demise of the Regional Development Agency, One North East; how young people could be engaged with to highlight the opportunities in the engineering and manufacturing sectors; why a number of enquires to BD were listed as being from “unknown”; preferred supplier lists for DCC; the wide scope of the 6 principles as set out; information as regards the make-up of the SMEs within the County; financial sustainability for BD; and measures to demonstrate delivery and impact. 

The Managing Director, BD explained that investment from outside of the UK was around 50% new investment, with 50% being linked to expanding businesses.  It was noted that a small number of enquires came through directly to BD via the internet and a number were directed by the UK Trade and Investment (UKTI).  It was noted that with the former Managing Director of BD had a coordinating role for the Combined Authority as Investment Gateway Manager for Invest North East England a further report would come forward in respect of this in March 2014.  It was noted that most investment was indigenous, with overall 20-30% being foreign investment. 

Councillors noted that there were working groups looking to securing European Funding that would allow a matching service between education and businesses, with there being a need to balance education needs and the needs of businesses in terms of A-Level, apprenticeships and other types of qualifications and training.  The Managing Director, BD noted that several enquires that come in from larger companies can sometimes be anonymous as not to affect share prices, but as they are usually directed via UKTI the enquiries could be viewed as genuine. 

The Committee were reminded that there were procurement frameworks in place for different levels of contract, with small, medium and large contracts where local companies can be asked for expressions of interest in the smaller cases up to full Official Journal of the European Community (OJEC) for large contracts.  Councillors noted that companies were encouraged to access the NEPO procurement portal to be able to tender for contracts.

The Chairman thanked the Managing Director, BD and asked Members for their questions on the report.

Councillors asked questions in relation to the broad nature of the 6 principles; information relating to business sizes and employees in the County; the timescale for financial sustainability for BD; measures in place to evidence impact against objectives; and “developing a strategic footing” at Newton Aycliffe.

The Managing Director, BD explained that the 6 principles were inherited and noted moving forward there would be greater focus on sector strategies and “targeted diversity”.  It was explained that that BD was working with the FSB and Enterprise Agencies as regards data, with the Office for National Statistics (ONS) data being in some cases 18 months old.  Members noted that some initial information was that of the “Top 200” businesses in County Durham, only 2 had more than 1,000 employees, around 10 had between 500 - 1,000 employees and around 20 had between 250 - 500 employees.  It was explained that the rest were SMEs or microbusinesses, representing the majority of the businesses.  The Managing Director, BD noted that it was hoped that the financial sustainability for BD would be bottomed out over the next 4-5 years and that the data sets demonstrating the impact of improvements, growth and EU funding would also be developed over the next few years.  The Committee noted that the CDP set out the spatial elements as regards growth and it was added that BD worked with Private Sector Boards as regards making sure Agreements were in place.  

Resolved:   

That the report be noted.