Agenda item

(i)         Joint Report of the Director of Transformation and Partnerships and the      Corporate Director of Regeneration and Local Services.

(ii)        Update on the work of Business Durham – presentation by Simon Goon,    Managing Director, Business Durham, Regeneration and Local   Services.

The Chairman introduced the Managing Director, Business Durham, Dr Simon Goon, who was in attendance to provide the committee with detail of the work and impact of Business Durham (BD) (for copy see file of minutes).

 

The Managing Director, BD introduced the Business Development Director, Sarah Slaven who was also in attendance to provide further information for Members.

 

It was explained that it would be a whistle-stop tour of the work undertaken by BD, and that as the economic development company for County Durham, BD would:

 

·         Deliver the environment for economic and business growth and raise the profile of Durham as a place where business is done;

 

·         Help businesses locate, stay, grow and diversify and create wealth in County Durham.  At the same time deliver financial self-sustainability and operate in a commercial manner;

 

·         Act with integrity with clients and partners;

·         Take on new challenges;

·         Flexibly balance the needs of the team;

·         Drive innovation and creativity;

·         Deliver in partnership.

 

Members noted there were three main functions within BD: Business Space, led by Peter McDowell; Business Development, led by Sarah Slaven; and Innovation and Business Growth, led by Catherine Johns.

 

It was explained that while BD supported businesses, there being approximately 9,000 in the County, however it was noted that Visit County Durham (BD) supported leisure and tourism, with the retail sector being under the remit of Economic Development.  Councillors noted the importance of innovation and the impact of developing new areas of activity, such as the Space sector, and noted the North East Space and Satellite Applications Hub (NESSA) which gave strength at a national level.

 

The Managing Director, BD noted the performance of BD in engaging with around 1,000 businesses per year (10% of the businesses in County Durham), encouraging projects that looked at growth as well as helping smaller companies in addition.  It was added that BD made good use of communication channels to promote good news stories and that through this and networking opportunities there was the ability for “iron to sharpen iron” in that respect.

 

It was added that there were a number of strategic programmes, including: the Durham Business Opportunities Programme; Durham Smart County; Finance Durham; North East Space Incubation Programme; EU Interreg Space and Photonics Programme; and also securing the North East Satellites Applications Centre of Excellence for another three years.  Members noted work in terms of business properties with refurbishment of 1980s stock to help improve the facilities and in turn generate more rental income.  It was added that in respect of small scale units no new properties had been identified in 20 years.

 

The Committee noted there were a number of unique selling points for County Durham, including: a world top 100 university; the best police force in the country; home to four national technology centres; home to the largest industrial estate in the North East; being a growth hotspot identified by the European Financial Times 1000; having the only science park in the UK with two science catapult centres; and had a manufacturing sector which accounts for 20% of its economy.  The Managing Director, BD noted work with partners in terms of the Business Enterprise Framework, the approach agreed by the CDEP, looking to grow the number of businesses and the number of jobs.     

 

Members were reminded of the BD property portfolio, with the stock falling into 3 main types, large industrial units, office space and NETPark.  Councillors noted that Salvus House had been purchased by the Council in November 2016 to be converted into a range of office units and now had 48% occupancy.  It will also house the Durham City Incubator.  It was added that there were units at the Business Park at Consett, in addition to the offer at NETPark, together with the NETPark Incubator.  It was noted that overall occupancy levels had been grown, from just over 70% 3 years ago to 85.8% now, with industrial spaces having an occupancy in March 2017 of 93.5%, and NETPark having occupancy levels of 99.3%.

 

The Managing Director, BD explained as regards investment in infrastructure for NETPark Phase 3, 13 hectares of additional serviced land for development, with the potential to create 350,000 square feet of new space, creating 1,400 jobs over the next 15 years.  Members noted £2million of industrial investment by DCC in terms of industrial estates at Chilton, Tudhoe and Ferryhill.  

The Committee noted that in terms of growth at Aykley Heads, it was an opportunity to augment County Durham, with an excellent example in Atom Bank working with the FBM programme and schools as well as providing 340 “more and better” jobs.  It was added that growing the area into a business district for Durham City would in turn be for the benefit of all of County Durham.

 

The Business Development Director reiterated the comments made in relation to the previous item in respect of aspiration, highlighting the success of FBM, the programme having been running for 12 years, with all secondary schools invited to enter.  It was added that participation had been good with 21 out of 32 County Durham schools involved this year, however, Members may be able to help encourage those schools not participating to join and realise the benefits of working with local businesses in this way.  It was added that many businesses were keen to get involved, and to run workshops with schools and arrange visits for students to their businesses in addition as appropriate.  The Committee noted that businesses, such as Thorn Lighting were keen to engage with young people and, as previously mentioned, it may be possible to utilise video conferencing in terms of working with Year 7 pupils, another opportunity to raise aspirations.

 

Councillors noted the Durham International Festival of Enterprise, which had held its first annual event in February at the GALA in Durham, with over 300 people having attended.  Members learned other work to promote enterprise included with Durham University and the Enterprise Agencies in the County, promoting “Kick Start weekends”, the university’s Blueprint Enterprise Challenge and “Entrepreneurs Durham”, a student society.

 

It was noted that as a response to an earlier question in terms of “brain drain”, the Durham City Incubator was a partnership between Durham University, New College Durham and Durham County Council, based at Salvus House.  It was explained that this would offer intensive support for start-up businesses, offering a package of support including accountancy and legal services.  It was noted that EU funding had been applied for in this respect and that it was hoped that once the concept was proven that it would attract private sector investment.

 

In terms of enterprise, there would be a refresh of the Enterprise and Innovation Strategy, making it clear “who did what” and looking at gaps, such as helping self-employed people moving from year 1 to year 2 in their business.

 

Councillor A Hopgood left at 10.50am

 

Business Development Director explained that business engagement was the main area of BD’s work and this included helping with issues associated with land, premises, new staff, where BD could help make connections and coordinate.  Members were reminded of our three business parks: Aycliffe; Peterlee; and Drum; and that mechanisms were given to help them engage with their local areas, looking to increase business opportunities so that businesses could help themselves within each business park.  It was noted that Aycliffe was very active with a new website in development to help raise awareness and also representatives had visited two local schools to highlight what businesses did in their business park. 

 

 

It was added that in terms of Peterlee Business Park there had been actions in terms raising the profiles, working with local schools and with a special edition of their business park newsletter entitled “Careerwise”.  Members noted that there were similar activities at Drum Business Park at Chester-le-Street.

 

The Committee noted that Durham Business Opportunities Program (DBOP) that has secured European Regional Development Fund (ERDF) funding to help engage businesses that tend not to take up support and to connect them with market opportunities and how BD can help them to grow. 

 

It was explained that 97% of businesses in County Durham were small or medium sized enterprises (SMEs) and that often they did have the time or capacity to chase such funding opportunities.  An example given was of the childcare sector, with Government changes coming into effect in September 2017 meant that many parents would have the opportunity to access 30 hours of free childcare a week, an increase from 15 hours.  The Council’s Early Year Foundation Stage Team had identified that not all providers were geared up to provide those additional hours and therefore in helping those businesses prepare it would not only provide them with additional work, it would have an additional effect in helping parents to access work if good childcare provision was in place.

 

The Business Development Director added that in terms of SME Digital Adoption and the provision of superfast broadband to support businesses, there were some grants in terms of being able to help businesses understand and take the opportunities to allow digital services to support and improve their business.  Members noted the significant contribution that the engineering and manufacturing sector made in terms of the County’s GVA and therefore it was important to support original equipment manufacturers working with the automotive and rail sectors, especially in the uncertainty regarding brexit to ensure more UK suppliers.  It was highlighted that there would be a “Get into Rail North East” event, in conjunction with the County Durham Engineering and Manufacturing Network, with 69 businesses to be in attendance.

 

Members noted that in terms of inward investment, BD worked with the Department for Transport and other Local Authorities in the region, with 14 projects last year, an example being Res-Q at Spectrum, Seaham.  It was explained that “Durham 2sday” was a relaxed and informal networking event in the heart of the City of Durham for North East entrepreneurs, executives and start-ups from a rich mix of sectors and had been running very successfully for around 2 years.  Councillors learned that BD helped in terms of a group of SMEs that meet with the Bank of England as regards providing intelligence to the Monetary Policy Committee, making County Durham’s voice heard in terms of policy

 

It was added another activities included innovation breakfasts and “Food Truck Friday”, the latter operated at Aykley Heads helping to create a business community.

 

The Business Development Director noted, in terms of securing venture capital for our County, the formation of Finance Durham LP, Financial Conduct Authority registered, and with Maven Capital Partners managing the investment fund.  It was noted this was for investments of typically around £200,000 to £700,000, though up to £2 million, with 10% of funds being set aside for start-ups.  Other aspects included that “soft side”, helping businesses to be capable and able to access finance and encourage this across County Durham. 

It was added that the fund has been designed to link with other investors, such as the JEREMIE 2 fund, and investments will be spread out across all sectors and sizes of business, designed to give a mixed risk portfolio.  Member noted that to be eligible, businesses need to be based in County Durham or be relocating to the region when the investment is made.  Members noted that for NEWCO, DCC had been shortlisted for a Management Journal (MJ) Award in 2017.

 

Councillor D Hall left at 11.05am

 

The Committee were reminded of further developments at NETPark and the Satellite Applications Catapult and the Managing Director, BD added that a visit to NETPark, and Salvus House, may be beneficial for Members.

 

The Managing Director, BD noted “Industry 4.0” or the fourth industrial revolution (mechanical, electrification, automation, digital) and explained that Durham Smart County was the approach of putting problems at the centre of sector strategies and using them to focus and build local capabilities.  It was added that it was important to frame up questions in order to get the best answers, and an example was the issue of health inequalities.  It was noted that one of the underlying causes was social isolation and that via the Small Business Research Initiative (SBRI) it was possible for the private sector to look at innovation in building materials and better engagement in our own health.  Members noted that through more collective working and better commissioning there would be more economic activity.  It was explained for Durham there were three companies looking at this specific issue, one utilising smart phone and smart watch technology to monitor and flag up issues with a person’s health, with others including myPALs, with St. Cuthbert’s Hospice and “Be Together”, technology.

 

The Committee noted that the space sector was very important and growing, a £40 Billion opportunity, with areas including satellite technology.  Members were reminded of the Catapult and the work to help SMEs access those opportunities.  An example given was the use of satellites to track jellyfish blooms near to power stations, as they can block the inlets for cooling water, and therefore measures can be taken as soon as possible to prevent the need for a shutdown.  The Managing Director, BD added that another application of such technology was in “RealRider” a system that tracks motorcycle riders and alerts the ambulance service should the rider be involved in a crash.  It was explained that this was primarily through the use of an app on a smartphone, however there was possibilities of integration into smart fitness technology and introducing the product to the US market.  It was noted that space technology had great potential in helping tackling many issues from environmental protection to human trafficking.

 

The Managing Director, BD noted that promotion of County Durham was key and that BD worked to promote “Durham as a place where business is done” through: business engagement; innovation; enterprise; inward investment; and its business properties.  He concluded by noting that the overarching “This is Durham, Place of Light” brand would be used to showcase County Durham as a place to live, visit, work and do business.

 

The Chairman thanked the Managing Director, BD and the Business Development Director and asked Members for their comments and questions.

 

Councillor T Henderson noted the success of large scale industrial and technology parks, such as NETPark, however, he noted that there was a need for smaller business units to be made available, especially in the Weardale and Teesdale areas with local centres nearly full.  The Managing Director, BD noted that there was work ongoing to look at a number of potential schemes, with the private sector, where there was demand. 

 

He added that there was an issue in terms of a development gap, with the cost of such units being £10-12 per square metres, with rent only being around £5-6 per square metre and work was being undertaken to look at different models, however, it was not a simple issue to tackle.

 

Councillor A Reed noted the new shopping area in Bishop Auckland was fantastic, however added that businesses were disappearing, as in other town centres also and therefore how could this be tackled.  The Managing Director, BD noted that BD’s focus was non-retail, and that teams working within the Economic Development service would be best placed to advise Members on the relevant schemes and projects.  Councillor A Patterson noted that Councillor J Allen had done a lot of work in terms of the regeneration at Bishop Auckland working with the Castle and with other developers and that some of the empty retail premises had been sold and were in a period of transition.

 

Councillor P Jopling asked why around one-third of secondary schools were not engaging with the FBM scheme and whether it was an issue of finance.  The Business Development Director noted an issue can be for a school to identify a member of staff keen and able to take on the role.  While there was some funding available, the school had to fund transporting pupils to various workshops and participating in the FBM project is not seen as a priority by some schools.

 

Councillor M Davinson referred to the related performance indicator set out within the performance report which noted a decrease in the number of businesses engaged with and asked why this was the case.  The Managing Director, BD noted that in terms of the performance indicators associated with BD he was happy in term of the reduction as more businesses are self-served, and therefore BD could help legitimate business projects get off the ground.  He added that there was now a more refined approach, evolving as required, and while those numbers were reducing, there was more efficiency and productivity in terms of those engaged with.  Councillor M Davinson asked if therefore it would be more useful to have a new indicator, for example similar to that for the number of unique visitors to the Visit County Durham website.  The Managing Director, BD noted that there were a number of internal targets and measures.  The Managing Director, BD noted that the volume of those engaged with was important, however, so was the quality and specificity of such engagement.

 

Councillor E Adam noted that the Managing Director, BD would be leaving his role and asked that he be thanked for all the hard work and excellent service he had given during his time at BD.  He also asked as regards technology companies moving out of Durham and of the impact of artificial intelligence.  The Managing Director, BD noted that there can be many reasons why a business would choose to move, including if a neighbouring area offers a deal on business space.  In terms of artificial intelligence, he noted this was a very interesting field and that there were jobs in this area already within County Durham.  He added that it linked into many of the issues discussed within the report and presentation and was an area that the Authority would need to be alert to.

The Chairman thanked the Managing Director, BD for all of his work, noting he would be a huge miss, and wished him all the success for the future.

 

Resolved:

 

(i)           That the report and presentation be noted

(ii)          That the Economy and Enterprise Overview and Scrutiny Committee receive a further report detailing the progress and further development of business activity undertaken by Business Durham at a future meeting of the Committee as part of the 2018/19 Work Programme.

(iii)         That arrangements be made for a site visit to Salvus House as part of the Committee’s Work Programme for 2017/18.