…help yourself to some lunch!

EMC Technical Assistance Project

Andrew PritchardDirector of Policy & Infrastructure

Introduction

What is it all about? Some background Your mission today…

What is it all about?

A technical assistance project led by East Midlands Councils to provide an evidence base for future EU funding

To make sure that we maximise the potential of EU investment across the East Midlands

Strong support from DCLG & Council Leaders for the project

Localisation of EU funding

Establishment of a national ‘EU Growth Programme’

LEPs to develop EU investment strategies Each LEP to be given a ‘notional allocation’ of

EU funding to prioritise Option to ‘buy-in’ to national programmes Payments to be made centrally Notional allocations will be reviewed against

performance from 2017 onwards

“Show me the money”

EU Growth Programme = €6.2 billion UK Local Growth Fund = £2 billion

In and around the EM

D2N2: €249.7

GLLEP: €133.5

LLEP: €126.3

NEP: €55.0

SEMLEP: €88.3

GC&GP: €75.5

UK Local Growth Fund

New Homes Bonus £400m

LA Major Transport Scheme £819m

Local Sustainable Transport Fund £100m

Integrated Transport Block £200m

Further Education Capital Fund £330m

ESF Skills Match Funding £170M

Emerging UK Priorities

•Innovation•SME Competitiveness•ICT 60% + of ERDF

•Employment•Skills•Social Inclusion 80% + of ESF

•Climate Change•Environment•Sustainable Transport No Minimum spend

•Low Carbon Economy 20% + of ERDF

Also…

Minimum 20% of combined ESF/ERDF on ‘social inclusion’

Gender equality, equal opportunities & non-discrimination

Sustainable development

Programme Timescales

7 October 2013: Draft LEP EU Investment Strategies

January 2014: finalise strategies

March 2014: new EU Programme starts

2017 – first review of notional allocations

Current Experience

Spend under the current ERDF Programme has been slow

Too many small projects - difficult to see a strategic impact

Original operational programme did not fully meet local needs - e.g. Broadband

Future Challenges

1 region replaced by 7 LEPs – 4 overlapping

Pressure for early spend on projects that will deliver clear outcomes

LEP notional allocations to be reviewed in 2017- under-performance could be penalised

Threats v Opportunities

What are we going to do?

Facilitate a series of consultation events Develop an evidence base (or ‘socio-

economic framework’) to inform both the UK Growth Programme and individual LEP Strategies – working with NTU.

Highlight potential areas of collaborative activity that can maximise strategic impact and reduce ‘transaction costs’

Events Diary

1st July: Greater Lincolnshire LEP 5th July: Leicester & Leicestershire LEP 9th July: Competitiveness Round Table 16th July: NEP/SEMLEP 22nd July: D2N2 25th July: Green Economy Round Table

Project Timescales

End of July 2013: Interim Report

September 2013: draft Framework

December 2013 – final Framework

January - June 2014 Awareness raising

Key Outcomes

“It’s the economy, stupid”

More Jobs Less Worklessness

green

V

Your mission today…

To think about how best EU funding could be used to develop the green economy.

To highlight areas or issues where wider collaboration might be helpful.

To ask if you do not understand.

East Midlands PA3 ProjectSocio-Economic Evidence –

Low Carbon Thematic ObjectiveEast Midlands Regional Roundtable

25th July, 2013

Chris LawtonNottingham Business School

Project Rationale and Objectives• The project aims to provide socio-economic evidence to

help identify synergies, linkages and common challenges across LEPs within or overlapping the East Midlands

• Emphasis on the 5/6 Thematic Objectives (out of 11) prioritised by UK Government: Innovation, Enterprise, Low Carbon, Skills, Employment/tackling worklessness

• To identify opportunities for collaboration between LEPs• The UK Government would:

“like to see Local Enterprise Partnerships working with each other to deliver a bigger impact… and achieve economies of scale wherever possible”

Source: HM Government, April 2013. ‘Technical Annex: Preliminary guidance to Local Enterprise Partnerships on development of Structural & Investment Fund Strategies.’ paragraph 2.8, p. 4.

Contains Ordnance Survey data © Crown copyright and database right, 2013.

Local Enterprise Partnerships within or overlapping the East Midlands Region

Chart 1: UK GDP Growth (NIESR modelled monthly estimates), 2008-present compared to previous recessions

Source: NATIONAL INSTITUTE of ECONOMIC and SOCIAL RESEARCH, November 2012. ‘Monthly GDP Estimates’, www.niesr.ac.uk

Economic Context

Economic Context

Source: ONS Crown Copyright, 2013. ‘Annual Population Survey’, January-December 2008 and January-December 2012. From NOMIS [accessed 24th June, 2013].

Chart 2:Employment rate (% working age residents), 2012

What is the ‘Low Carbon’ EU Thematic Objective 4?

• Separate, but complimentary to EU Thematic Objectives 5 and 6, ‘Climate Change’ and ‘Protecting the Environment & Promoting Resource Efficiency’ in Europe 2020

• Emphasises activities in the green/sustainable development agenda that enhance:– Job-creation– Development and adoption of low carbon/ energy efficient technologies

amongst SMEs– Development of ‘whole place’ solutions in urban design, transport planning,

energy management, climate change adaptation etc.– Supply chain and knowledge transfer enhancement for development and

production of low carbon goods & technologies, services and processes

• Implication of UK prioritisation of Thematic Objective 4 but not 5 and 6 – projects/programmes will be favoured if they have a strong emphasis on the job and output-generating potential of low carbon, sustainable and energy efficient technologies, products, services and practices

Why is Low Carbon an important Thematic Objective?

• A ‘cross-cutting’ Thematic Objective, linked to the over-arching EU 2020 cohesion objectives of sustainable, ‘innovation-led’ recovery and ‘smart specialisation’

• Key part of the UK Government’s emphasis on growth:– Job creation and reducing worklessness (Objectives 8 and 9)– Increased demand for (and incentivising investment in)

workforce skills from employers (Objective 10)– Innovation (Objective 1)– Enterprise and SME Competitiveness (Objective 3)– Output - impact of increased demand from households and

supply chain customers for low carbon products and services will ‘spillover’ to benefit other sectors/activities

– Productivity - more efficient ways of utilising existing resources and shift towards higher value-added activities

What are the barriers and market failures?

• Availability of workforce skills• Information failures and risk/uncertainty

– On benefits to SMEs and potential investors, and also due to time-lags between up-front costs and future benefits

– On available support and areas of excellence– For household consumers and supply chain customers (demand)

• Investment/access to finance• Infrastructure (including knowledge infrastructure)• Externalities (where some of the costs or benefits ‘spill-over’ to

affect parties other than those involved in the original activity)• Externalities can provide a disincentive to investment in all kinds of

innovation (including in low carbon technologies), as the party making the original investment may not be able to recoup a sufficient share of the benefits

Defining the Low Carbon ‘Sector’• A combination of products, services, practices,

technologies and opportunities • The BIS ‘Low Carbon and Environmental Goods and

Services’ (LCEGS) definition includes:– Environmental solutions (such as control of air, noise and water

pollution, waste management and recycling) – Renewable energy technologies (e.g. wind, tidal, geothermal

and biomass) – Emerging low carbon activities (such as road transport

emissions reduction, nuclear energy, energy management, carbon capture and storage, etc.)

• With the exception of energy generation and water/waste, most of these activities occur across many sectors – including Construction and Transport Equipment Manufacturing

Profiling the Low Carbon ‘sector’• BIS define LCEGS in terms of goods/services produced and/or traded,

supply chain activities, and R&D and training activities – rather than SIC• In all English regions, LCEGS account for between 3.0% (Yorkshire &

Humber) and 3.7% of employment (North East and London)• LCEGS accounts for 62,500 East Midlands jobs, which is 3.1% of BRES 2011

work-place employment in the region

– Renewable Energy is over-represented in East Midlands, accounting for 34% of total LCEGS employment, compared to 29% in England

– Low Carbon accounts for the largest share in both the East Midlands and England (49% compared to 50%)

– Environmental is the smallest LCEGS sub-sector in both the East Midlands and England (17% and 21% of total LCEGS employment)

• All East Midlands LCEGS employment is 7% of UK total• EM share of UK LCEGS employment is similar to the East of England, the

South West, the West Midlands, and Yorkshire and the Humber• Greater share of LCEGS in London (20%), the North West (10%), and the

South East (12%)

Low Carbon Sub-Sectors

Source: K Matrix, on behalf of BIS, 2012. ‘Low Carbon Environmental Goods and Services: Report for 2010/11’.

Chart 3: Employment in LCEGS Level 1 categories and Level 2 sub-categories (% of LCEGS total), 2011

Employment in SIC 35: Power Generation and Supply (%), 2011

Source: ONS Crown Copyright, 2012. ‘Business Register and Employment Survey, 2011.’ Data accessed from NOMIS [17th June, 2013] and analysed under Chancellor’s Notice Ref NTCBRES11-P0537. Contains Ordnance Survey data © Crown copyright and database right, 2013.

Low Carbon Assets• Significant power generation sites – includes 2 co-firing stations

near Retford in D2N2 (as well as nationally important coal-fired site at Ratcliffe-on-Soar) – and E-ON and EDF energy offices

• R&D intensive manufacturing related to power generation equipment: includes Cummins in NEP and Alstom and Siemens in Greater Lincolnshire

• Lower proportion of renewable generation in the region, but hydro, wind and biomass capacity increasing

• Sector specialisation in Transport Equipment (D2N2 and LLEP) includes international leaders in low carbon/fuel cell technologies (Rolls Royce, Toyota etc.) and HE research links

• Centres of excellence include:– British Geological Survey (D2N2)– The Energy Technologies Institute (ETI) (D2N2, LLEP and Coventry &

Warwickshire LEPs)

Summary Points• Cohesion Policy 2014-2020 presents Low Carbon as an integral part of a

sustainable, innovation-led recovery• UK emphasis on potential productivity, innovation, employment and skills

outcomes of Low Carbon projects/programmes• Projects/programmes could address similar barriers/market failure to those that

affect innovation more generally – with some specific skills, information and investment issues & opportunities

• The East Midlands has some key comparative advantages, notably related to power generation and transport equipment – but also alternative fuels more widely and building technologies

• Opportunities for collaboration between:– D2N2, LLEP and Coventry & Warwickshire LEPs (low carbon technologies related to transport

equipment and high tech engineering more widely)– Greater Lincolnshire, D2N2 and NEP in power generation and energy efficient technologies for

the power generation sector (e.g. gas turbine technologies, wind turbines)– Renewables in rural areas across the EM (e.g. biofuels)– Collaborative opportunities in green urban planning (Nottingham, Leicester, Derby?)– The LLEP event identified EM-wide opportunities in the Green Deal for low carbon outcomes

in both household and commercial properties (new build and retrofit )– Opportunities to link or support EU-funded economic development projects/programmes

with adaptation investments (i.e. through the National Adaptation Programme) – e.g. improving the viability of development in an area affected by flood-risk

How Can we use EU Funding to…

Move SMEs in all sectors towards a ‘low carbon’ economy

Adapt to climate change and reduce/manage the associated economic risks

Improve resource efficiency and

protect the environment?

Boost SME growth in the wider ‘green economy’

Thank you for coming and have a safe journey home!