Agenda item

Report of the Corporate Director of Regeneration, Economy and Growth – presented by Funding and Programmes Manager, Regeneration, Economy and Growth.

The Chair introduced the Funding and Programmes Manager, Claire Williams who was in attendance to provide the Committee with an update report in relation to European Union (EU) Funding (for copy see file of minutes).

The Funding and Programmes Manager noted she would explain as regards the current funding position and also what replacement funding may be put in place after the current funding period ended.  Members were reminded that EU funding had provided a significant investment into County Durham, supporting the economy, businesses, innovation, low carbon measures and increasing skills and improving employability.

The Funding and Programmes Manager explained that County Durham was a “Transition Region” and had its own ring-fenced allocation of structural funds of £155 million.  It was added that this was split between just over £86 million European Regional Development Fund (ERDF) and approximately £69 million European Social Fund (ESF).  The Funding and Programmes Manager noted the County had benefited from two LEADER programmes funded through the EU’s Rural Development Programme, adding that those programmes had closed with the funding of £4 million having been fully committed.

Councillor J Charlton left the meeting at 10.10am

The Funding and Programmes Manager added that County Durham had also benefited from a share of the region’s Rural Growth Programme of £105 million.

It was explained that following the referendum in June 2016, the Government guaranteed funding for existing EU programmes.  The Funding and Programmes Manager noted that represented a ‘business as usual’ position, and therefore work had continued with partners to develop project applications and, where possible, extend existing projects in order to maximise funding before it ended in 2023.

Members were referred to tables within the report detailing the current spend position and were asked to note the significant amount of work undertaken to commit ERDF, with approximately £76 million committed to projects.  She noted that spend was almost fully committed across most of the investment priorities, including £18.5 million to deliver innovation and research development projects and over £42 million supporting the competitiveness of local businesses.  The Funding and Programmes Manager noted an underspend in low carbon, explaining there had been attrition in the application phase of projects and that, overall, there was a balance of £10.5 million.  She noted that any residual funds would be pooled nationally, and the focus of those funds was towards the response to COVID-19, with new calls via ERDF supporting the visitor economy and high streets.  She added that DCC had received an allocation of just under £500,000 providing 100 percent funding to support the high street and other public places to reopen safely.  She noted any residual funds were expected to focus on the economic recovery from the pandemic and a new ‘Welcome Back Fund’ had been launched which would help Councils boost tourism and improve green spaces in light of the reopening, with details expected soon.  It was added that the figures through the national reserve fund were not included in the table within the report.

In respect of ESF, it was explained that against the allocation of £63 million the county has currently contracted £50 million, including projects that had received their grant offer letter or opt-in activity that had been approved.  The Funding and Programmes Manager noted a further sum of approximately £20 million in commitments securing additional funding, as explained by the Strategic Manager - Progression and Learning within the DurhamWorks presentation.  It was explained that, taking all commitments into account, there was delivery of around £70

million pounds of ESF activity to support employment and skills and there was a recent call for YEIs with Durham submitting a bid for a further £3 million to extend

the DurhamWorks scheme.  Members noted that there was no residual ESF in Durham and that at a national level any remaining funds would be pooled and distributed at a national level, focusing on the recovery from COVID-19.  The Funding and Programmes Manager noted further calls in spring and therefore Durham may have a further opportunity to benefit from ESF and maximize that opportunity.

The Funding and Programmes Manager noted DCC had responded to the opportunity of EU funding and was the applicant for a significant number of projects, as set out in Appendix 2 of the report, 21 projects worth a total of £71.3 million.   She added Appendix 3 of the report listed other ERDF projects that had been delivered within the county.  The Committee were asked to note that given the benefits the county had in terms of EU funding, it was vital to look ahead at securing replacement funding and it was explained that the Government had announced that EU structural funds would be replaced with a UK wide Shared Prosperity Fund (SPF).

It was explained there were only limited details in terms of the operation of the SPF, however, key heads of terms were released as part of the Spending Review in 2020, and Government intended to use the SPF to target those areas most in need such as deprived towns or rural coastal communities.  It was added that there would be two parts, an employment and skills programme to improve employment for those out of work and a place based programme targeting those areas of need, providing investment to people, place, and business.

The Funding and Programmes Manager explained that the Government had committed to the total amount of funding across the whole of the UK at least match what was currently obtained through EU receipts, although details of allocation had not yet been received.  It was added that Government noted they would publish an Investment Framework in spring 2021 however, it was likely that would now be summer, with the amount of funding to be announced in the Spending Review around September 2021.

It was noted that recent research had shown that had the UK remained within the EU, County Durham would have been classed as a ‘less developed region’ and this potentially could have meant more money for the county.  The Funding and Programmes Manager explained it was estimated, based on the amounts per

capita that current less developed regions received, County Durham could have more than doubled what it currently received to at least €300 million in the next programme.  She added that therefore it was key that under the new UK SPF that County Durham continued to have a protected allocation of funding which at least matched what would have been received under the next EU programme period.  She noted it was also important that funding was in addition to existing national regeneration funding, rather than as a replacement for it.  It was explained that there was also a need to ensure that the allocation was based on need rather than through a competitive process and that it would be preferable that the process was less bureaucratic and that there was local control so that the decisions around funding was held at a local level.

The Funding and Programmes Manager explained that in the interim, before the UK SPF was rolled out in 2022, the Government had recently launched a UK Community Renewal Fund with details having been provided in the Budget. 

It was added that it would provide £220 million for the whole of the UK to spend in 2021/22.  It was noted it was aimed to help move away from EU funding and prepare for the rollout of the SPF by piloting new approaches and new programmes. 

It was explained that 100 Local Authority areas had been prioritised for the funding according to a new index of economic resilience, with County Durham identified as one of those 100 areas.  The Funding and Programmes Manager noted that did not mean a guarantee of funding, or an indication of how much, however it would be taken into account as part of the assessment criteria.  She explained bids of up to £3 million could be submitted under four key themes around: investment in skills; investment in local businesses communities; investment in place; and supporting people back into employment.

The Funding and Programmes Manager noted a lead body for each area had been

identified and for County Durham this was the County Council, with lead bodies being responsible for inviting applications forward through an open bidding process and to encourage all stakeholders to apply.  It was explained that a lead body had to appraise and prioritise applications and submit a short list to Government by a deadline of 18 June.  She noted it was anticipated that Government would announce successful projects from late July onwards.

It was noted that within the recent Budget, the Chancellor had announced details of a new ‘Levelling Up Fund’ and while not related to the replacement of EU funding it represented a significant amount of up to £4 billion for England.  The Funding and Programmes Manager noted a proposal could be submitted up to a total of £20 million, or up to £50 million for transport schemes, for one project or for

a package of up to three projects.  She noted each area could submit one proposal in total from each of the parliamentary constituencies within its area, equating to six for County Durham.  It was noted the deadline for the first round was 18 June and priority in that round would be given to spend that could be delivered within the financial year 2021/22.  Members noted there would be future opportunities to bid in subsequent rounds for delivery up to March 2024, with three main priority areas for funding: investment in transport; regeneration and town centres; and cultural and heritage assets.  The Funding and Programmes Manager noted it would be important to look coherently at the whole county and how the Council engaged and supported stakeholders in the process.  She concluded by noting Appendix 4 to the report contained a summary of the criteria for the Levelling Up Fund and Community Renewal Fund.

The Chair thanked the Funding and Programmes Manager and asked Members for their questions relating to the report, noting the pre-election period.

Councillor R Crute, Chair of the Corporate Overview and Scrutiny Management Board noted he had a couple of concerns.  He noted two points, firstly a need to have more information relating to the investment framework as it would be important to not only ensure County Durham had at least as much funding as it had previously received, but also to ensure there would be at least as much allocated to County Durham as it would have received had the UK not left the EU. 

He added that while the quantum of funding was important, he thought it was equally important that the governance arrangements were also right.  He explained that he had concerns as information was not forthcoming on the subject and noted developments earlier in the week with Government having announced the demise of the Industrial Strategy Council.  He noted he was concerned that framework could be applied to the UK SPF adding that, along with centralisation of funding through the Treasury, if governance arrangements were taken away from local areas he felt that there could be serious concerns regardless of the amount of funding County Durham received.  Councillor R Crute noted it was not known when more information on the governance arrangements for the SPF would come forward, however, he looked forward to seeing the investment framework which he understood was delayed from spring to summer.

The Funding and Programmes Manager agreed in terms of the importance of

having not just the amount of money that the county would have received, but also details of the governance arrangements.  She noted the important in terms of where the decision-making was held but also of the benefit that a ring-fenced allocation for County Durham had provided through the current EU programme.  She explained that the ring-fenced allocation had meant that Deliverers had to take account the local needs and the differences within County Durham which had not been the case previously.  She noted that when Providers delivered within County Durham, including cross-boundary activity, they needed to take account of local circumstances.  The Funding and Programmes Manager noted that it would be important to ensure there was that recognition of that within the roll out of the SPF and that there was a decision-making process with local control.  She noted further details were expected to be included within the investment framework as regards delivery arrangements, with it being hoped there would be more information in the summer.

Mrs R Morris referred to paragraph 23 of the report which set out information as regards what the county may have received in terms of funding had the UK remained in the EU and asked if there was a ‘Plan B’ if the amount of funding received was not at those levels.  The Funding and Programmes Manager noted in looking at how the economy had been impacted by COVID-19, there was work ongoing to develop a new economic strategy for the county and that would set out the framework and the priorities that the county wanted to fund.  She added that there would then be a need to look at where different investment may

come from, not just through the SPF but through other investments that could then align them to the delivery of that economic strategy. 

Mrs R Morris noted areas to be considered included those relating to climate change/mitigation, with there being many economic opportunities within that area that could help to employ people.

Councillor J Atkinson referred to the new Levelling Up Fund, £4 billion for England and asked what the figures were for the UK.  The Funding and Programmes Manager noted it was £4.8 billion for the whole of the UK and £4 billion

for England.

Resolved:

(i)        That the content of the report be noted.

(ii)       That the Economy and Enterprise Overview and Scrutiny Committee support the principle for County Durham to continue to make a case for the maximum allocation of funding from the UK Shared Prosperity Fund, which at least matches what it would have received under the next EU programme, and that the Fund is allocated on a needs basis, flexible in nature and locally controlled.

(iii)     That the Economy and Enterprise Overview and Scrutiny Committee receive further reports as the programme continues as part of the 2021/22 work programme.