Agenda item

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

(ii)      Presentation by the Regeneration Policy Team Leader and the           Managing Director, Business Durham, Regeneration and Local           Services.

The Chairman introduced the Regeneration Policy Team Leader, Glenn Martin and the Innovation and Business Growth Director, Business Durham, Catherine Johns who were in attendance to give an update on progress in relation to the Local Industrial Strategy (for copy see file of minutes).

The Regeneration Policy Team Leader reminded Members he had attended Committee around a year ago to give an update as regards the position in terms of the Government White Paper in relation to the Industrial Strategy and Local Industrial Strategies (LIS).  Councillors were referred to a slide setting out the UK Gross Domestic Product (GDP) per hour worked from 2016 against those of other G7 countries, being fifth of those seven countries.

The Committee were reminded of the five Productivity Foundations: Ideas; People; Infrastructure; Business Environment; and Places.  The Regeneration Policy Team Leader added that there were also a number of Grand Challenges, namely: Artificial Intelligence (AI) and the Data Economy; the Future of Mobility; Clean Growth; and the Ageing Society.  Members were reminded of Sector Deals, with the current areas being: aerospace; AI; automotive; construction; creative; life sciences; nuclear; and rail.  The Regeneration Policy Team Leader noted that other sectors deals were in the pipeline, noting one sector which was keen to secure a deal, yet had not secured a deal, was the steel industry.  It was noted that in terms of the automotive deal, it was explained that the car manufacturer Nissan had not been mentioned.

Councillors were remined of Local Enterprise Partnerships (LEPs), including the North East’s (NELEP), role in terms of the LIS, that: “Local Enterprise Partnerships will adopt a single mission; to promote productivity by delivering Local Industrial Strategies”.  It was added that within the Government Policy Prospectus published in October 2018, it had been set out there would be waves in terms of LISs, with wave one including: Manchester, the West Midlands; the Cambridge to Oxford Corridor and Buckinghamshire.  Members noted that wave two would included the NELEP, the Tees Valley LEP and four other LEP and Combined Authority (CA) areas.  It was explained that it was envisaged by Government that the LIS would be in place by the end of 2019.

The Regeneration Policy Team Leader explained that guidance in relation to the North East was to: increase productivity; set out the spatial impacts of national policy; and also assumed LEP and Mayoral CAs had the same geographies, which was not the case and was also not the case for several areas elsewhere in the country.  It was reiterated that Government saw LEPs as being the lead in terms of LISs and as the Vice-Chair of the County Durham Economic Partnerships (CDEP) sat on the NELEP LIS Evidence Forum there was the opportunity for County Durham to feed into the LIS process.  Councillors were reminded of the launch of the NELEP’s Strategy Economic Plan (SEP) and noted that the LIS would be aligned to this, however, the LIS would have a sharper focus on productivity and look to pick up on one or two of the grand challenges previously mentioned.

Members were informed that the LISs would be developed with Government, with a standard branding and be published by Government. 

The Regeneration Policy Team Leader explained that one element yet to be understood was that of the Shared Prosperity Fund (SPF), which would replace EU funding following Brexit.  The Officer added that it was envisaged that it would be linked to the LIS being in place and having projects identified.  It was noted that a key challenge would be in each LEP retaining their distinctness.

Councillors were asked to note how delivery would be influenced, with engagement through the NELEP Boards, the North East Combined Authority (NECA), consultations and Officer engagement.  It was added that there would be continued lobbying via: Civil Servants; the Industrial Communities Alliance; the County Council’s Network; the Chief Economic Development Officers’ Society; and other various groups and networks.

The Regeneration Policy Team Leader noted the issues in terms of the LIS and the SEP, with the NELEP seeing the focus of the SEP to be on productivity.  It was added there was also issues in terms of resources once a LIS was in place, and that while there had not been a great deal of progress since last year, there was the additional guidance and information in terms of sector deals.

The Chairman thanked the Officer and asked Members for their comments and questions.

Councillor R Crute noted he had hoped for more in terms of the extent of ambitions of the LIS, with Government simply stating “good jobs” whereas the SEP noted “more and better jobs”.  He added that given the history, transport, University and technology in our County he would have assumed “the bar would have been set very high” and be linked to the issues of skills and transport.  The Regeneration Policy Team Leader noted he agreed, however, with national employment being around 75 percent, he felt Government was complacent in terms of creating more jobs as such.  He added there was the additional challenge in the North East in relation to issues such as ill health and those in receipt of benefits.  The Regeneration Policy Team Leader noted this was a message that was continued in terms of lobbying to raise the bar higher in relation to jobs.  Councillor R Crute noted the 75 percent employment, however, he reminded Members that the Committee had previously remarked that those jobs were not all quality jobs and that there was a need to create those quality jobs to allow people the freedom and confidence to spend.

The Innovation and Business Growth Director noted a key performance indicator for Business Durham was how many jobs were at a level greater than the average level and was important in relation to directing resources.  She added the focus of the LIS being productivity was essential and those grand challenges intersected with many high value sectors.

Councillor E Adam noted he agreed with Councillor R Crute and suggested that the lack of progress nationally had been as a consequence of Brexit.  He added his concerns was with the sector deals announced and the NELEP being within wave two, asking whether being within wave two would mean the NELEP and therefore the County missed on the opportunity to capture those types of businesses we would want to attract.  The Regeneration Policy Team Leader noted that Buckinghamshire, a wave one area, had a similar geography however, their performance is better than County Durham’s and included  several large profitable businesses including Silverstone; Pinewood Studios and many businesses that were ran from home.

He added there could be some analysis in terms of how they had achieved where they are, though he noted that successful areas would likely continue to be successful and that it would be for areas such as County Durham to look to maximise upon their own successes.  The Regeneration Policy Team Leader explained an area Buckinghamshire struggled with was having a large number of premises and areas ready for businesses to move into.  He explained that County Durham had a number of large premises and areas ready for business coming in the future and that this, together with other factors such as the lower cost of living, counted in the County’s favour and these elements could be marketed.  In relation to the NELEP being part of wave two and potentially missing out in comparison to wave one areas, the Regeneration Policy Team Leader noted that County Durham had always been successful in being able to “punch above its weight” and that while it would have been preferable to be within wave one, it was understandable in terms of the national economy why those wave one areas had been chosen.  Councillor E Adam noted he still felt as if those in the North East were treated as “second class citizens” and that Government was not interested in the North East.  He noted he appreciated the hard work undertaken by the Officers from the Council, Business Durham and the NELEP.

Mrs R Morris noted she had attended the launch of the SEP and while the report and presentation provided a good update in terms of strategy she did not get a feel as regards County Durham.  She referred to paragraphs 16 and 17 of the report, setting out the County’s strengths and asked if there was more information relating to this aspect.  Mrs R Morris noted that she felt a Skills Strategy was missing in terms of preparing County Durham, referring to recent Ofsted ratings highlighting 50% of schools within the County requiring improvement or being “inadequate”.  She added that it was with sadness she had noted the desire to attract graduates from outside the County and suggested it was vitally important for us to train our young people.  Mrs R Morris noted concern in terms of one organisation collecting information and asked how education and training are linking into the process.  She also asked if information was coming from the “Northern Powerhouse”; noted that the County did not have businesses within all eight of the sectors with deals; and concluded that the requirement for the strategy to be published by the end of 2019 did not leave much time.  The Regeneration Policy Team Leader agreed and added this was a reason for the focus and that for the Council the Regeneration Statement may require an update, to add in greater emphasis on issues such as the skills agenda.  He explained that Government focussed upon infrastructure projects.  Mrs R Morris asked how the targets set out within the report would be achieved.

The Innovation and Business Growth Director noted that Business Durham was not one organisation collecting data, rather they were drawing together available data from many sources to develop a concise summary, add actions, delivery and outcomes.  She added that County Durham represented 20 percent of the jobs within the NELEP and often the County “hid its light under a bushel” and there was a need to help demonstrate our successes and give examples of the story of our “place”.  She added that therefore it would be important to try to influence our LIS in terms of County Durham.

Councillor J Atkinson asked for any further information in relation to the SPF.  The Regeneration Policy Team Leader commented that the shared prosperity fund would look to replace EU funding from the end of 2020.  He added that consultation as mentioned by Government on this had not yet materialised and therefore there was an opportunity to tell government what we wanted.  Councillor J Atkinson asked if there was a number in terms of the funds that would be made available via the SPF and how they would be applied.  The Regeneration Policy Team Leader explained that hopefully this would be devolved to the LEPs and that funds would be used in line with the LIS priorities.  He added that it was not yet known as regards the amount of funding, however as County Durham was a “Transition Region” and attracted additional funding there would be a push to ensure that there was something similar in place.  He noted that amounts as regards the SPF could become apparent from the Government Funding Review.

Councillor M Wilkes referred to paragraph 16 of the report noting 100,000 jobs for the North East and suggested this may be a typographical error.  The Regeneration Policy Team Leader explained that this should have read 10,000.  Councillor M Wilkes noted the jobs safeguarded via the activities of Business Durham were around 250 per quarter and asked how many were created each year in County Durham and how we would plan if there were no EU funding or equivalent SPF monies.  The Innovation and Business Growth Director explained that there was a target for Business Durham and she could circulate a response to this.  She added that it was important to create “beacons”, for example in the Teesside area in the 1970-1980s ICI was a huge draw, in terms of direct and indirect jobs.  It was added that this idea needed to be developed further in County Durham, building upon our successes at NETPark, the four technology centres and two catapults with national acclaim and the University of Durham, a world class institution.  The Innovation and Business Growth Director noted a need to focus and tell the story of County Durham to let our successes shine. 

Councillor M Wilkes asked at what point would it be said to Business Durham that we had not seen this shift and to look again at the direction, especially for the young people within out County.  He added that he would not wish to have an approach of simply building more houses in order to create more wealth, rather than focus on creating more high-end jobs, his concern was that this was not happening quickly enough.  The Innovation and Business Growth Director noted that the Business Durham Advisory Group had representation in terms of the Leader of the Council and that it had been agreed to ramp up work, focussing on successes such as the technology centres and catapults, linking in to the Grand Challenges mentioned and looking to match up with available funding.  She added that there was an exciting shift taking place and that the new “Powered by People” campaign was adding to that momentum.

Councillor P Howell noted the issues raised in terms of the alignment of NECA, LEP and Local Authority areas, and asked if in our region, between the Tees Valley LEP and North of Tyne CA, would County Durham become squeezed and how would we address this.  He also asked as regards the challenge in terms of good quality jobs, creating the channels and routes to allow people to take up opportunities.  He noted the excellent job site at Newton Aycliffe and that the area also had some of the largest unemployment in the county and asked how we would align training with job creation.  The Innovation and Business Growth Director noted she did not feel there was a finite pool of jobs and that County Durham would be able to attract a number of companies with an offer that was high tech and based upon people, product and prosperity.  She agreed in terms of skills, noting that Business Durham looked to create demand and it was for other organisations to look to skills development.  The Regeneration Policy Team Leader noted he too agreed in terms of we had a number of sites in place or planned and that skills to match requirements would be important.

Councillor S Dunn noted he felt that the Government’s Industrial Strategy was “paper thin” and did not provide support for anyone and that those areas within wave one were the areas were those being targeted and that these areas know what they are doing, and he was not enthused that the NELEP was in wave two.  He noted that EU funding streams recognised need and there was a need to ensure that this fairness would be retained going forward for our region and County Durham.  He added he felt that the Government strategy was politically driven, and that County Durham could lose out.  Councillor S Dunn noted he felt that the LIS being driven by the NELEP was a little indirect and asked what control and influence County Durham could have on the LIS.  The Regeneration Policy Team Leader noted significant representation of County Durham on the NELEP itself, with the Leader of the Council, and representation through the Innovation and Business Growth Director and Dr Tim Hammond, Director of Commercialisation and Economic Development from Durham University were on the NELEP Innovation Board.

The Chairman noted the frustration of Councillors in terms of the lack of clarity so far in terms of moving from EU funding that had been needs based to the SPF with no indication of how this would be allocated.  The Innovation and Business Growth Director noted that this frustration was shared by all Local Authorities and that there was the opportunity for the region and County Durham to focus in the best of our people and place.  She reiterated that County Durham had a strong story to tell. 

Councillor P Howell noted he agreed with the concerns expressed by other members in relation to funding and how it is allocated.  

Resolved:       

(i)          That the report and Committee’s comments be noted.

(ii)         That the Economy and Enterprise Overview and Scrutiny Committee includes in its 2019/2020 work programme a further progress update on the development of the Local Industrial Strategy.