eu structural and investment fund strategy 2014-2020

EU Structural and Investment Fund Strategy 2014-2020

Context Cornwall and the Isles of Scilly is the only Less Developed region in England. This is recognition of our low economic base in relation to the EU average and it provides for Cornwall and the Isles of Scilly with the opportunity to use our experience and expertise in EU programmes to ensure that the investments achieve maximum lasting benefit. We welcome this opportunity to discuss and formalise with HMG the more bespoke approach they will be taking to the Less Developed elements of the programmes. Cornwall and the Isles of Scilly is a region with unique challenges and opportunities and we are keen to build a programme that focuses on growth but that has its foundations based in sustainability and resilience. We wish to see this recognised and maximised in our 2014-2020 programme. Key to this will be the inclusion in the national Operational Programmes of a separate chapter for Cornwall and the Isles of Scilly and a ring-fenced allocation of funds and priority allocations for the Less Developed region.

Response to the Government’s Preliminary Guidance This paper is an initial response to the Government's preliminary guidance issued on 12 April 2013. The guidance invited Local Enterprise Partnerships to respond to three questions:

1. Initial priorities for funding, and whether the Government’s priorities meet local needs. 2. Comments on the proposed approach to financial instruments. 3. Whether LEPs believe that any additional freedoms and flexibilities would enable them to deliver improved

outcomes at a reduced cost, and what these additional flexibilities would be.

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LEP responsibilities and consultation Cornwall and Isles of Scilly LEP is comfortable with the responsibilities and role proposed in the initial guidance to LEPs and we are confident in our ability to consult on and prepare a Structural and Investment Fund strategy by the end of September based on the detail available to date. What is important, however, is that any further responsibilities and requirements afforded by the full guidance are communicated as early as possible and takes into account the limited time and capacity of LEPs to prepare further information before the end of September. This work is being closely developed in consultation with democratically elected representatives, partners, stakeholders, business representatives and civil society. Outputs and results The targets set for output indicators will need to reflect the local Cornwall and Isles of Scilly context. It is noted that not … all regions can or should reach the national 2020 targets. This is neither realistic nor desirable. . ..programmes should select their investment priorities taking into account their baseline” 1 It is important to recognise Cornwall and the Isles of Scilly’s Less Developed region status and that our local context will be a key factor in framing the achievable quantum for each output indicator. Working with other LEPs Cornwall and Isles of Scilly LEP has already considered and is well aware of the requirement to work with other LEPs both geographically and thematically. We will identify similar likeminded LEPs across England to work with on selected activities. Cornwall and the Isles of Scilly are also keen to share their best practice and expertise in Structural Fund delivery and successes with other LEPs to ensure a holistic approach to growth under the national programme. Emerging proposals for programme delivery We envisage a growth programme for Cornwall and the Isles of Scilly that is delivered through an Integrated Territorial Investment, which integrates all the funds at a local level and offers further delegation through Community Led Local Development. Our proposal to date for the development / approval of projects is below.

1 Source: EU (2011) The urban and regional dimension of Europe 2020: Seventh progress report on economic, social and territorial cohesion.

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The above approval structure would be used for any investments made from the Cornwall and Isles of Scilly ring-fence. It is important to note that in terms of national and top-sliced products, Cornwall and the Isles of Scilly would participate in these on an ‘opt-in’ basis where the Less Developed region is involved in the procurement and commissioning of projects and where the initiatives meet local need and priorities and deliver better value for the programme than a locally designed product. The Cornwall and Isles of Scilly LEP is concerned by proposals that all 'novel and contentious' projects and those over £10m would need to go through a full national approval process. We understand that projects over £10m have always been subject to national approval and, provided this is a technical sign-off, understand why Government might want to continue this practice. However, we are unsure why Government would need to approve 'novel and contentious' projects, given that the LEP will only approve projects that match its agreed Structural and Investment Fund Strategy. Given the size and

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ambition of the emerging proposals of the Less Developed region, adding a full and separate approval process to the local process above could result in unnecessary delays to the programme. We would welcome discussions with Government as to how approval and appraisal processes for these type of projects can be streamlined at a local level. We intend to seek to develop Community Led Local Development coverage for 100% of the LEP area. This would require dovetailing EAFRD (via LEADER) in rural areas and ESF/ERDF in both urban and rural areas, along with EMFF where appropriate. To achieve this, a much more direct relationship between the current Local Action Groups, Council’s localism teams, community networks and the LEP than envisaged in the guidance is required and any proposed transitional activity for the current LAGs in Cornwall and the Isles of Scilly during 2014 should facilitate this approach.

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Executive Summary Section 1 – Initial Priorities This response has been prepared for, and agreed by, the LEP Board and endorsed by Cornwall Council and the Isles of Scilly Council and is fully aligned with the LEP Economic Growth Strategy 2012-2020. The four priorities of the Strategy are:

1. Inspiring businesses to achieve their national and global potential; 2. Creating great careers; 3. Creating value out of knowledge; and 4. Using the natural environment responsibly as a key economic asset.

These four priorities, and the guiding principle the culture, communities and environment of Cornwall and the Isles of Scilly will remain special and unique, have been used by LEP Board sub-groups to determine key provisional activities for the 2014-2020 European Structural and Investment Funds. The response maps the activities against proposed priorities in the Government’s preliminary guidance. While there is a reasonable fit between the LEP activities and the England priorities, as a Less Developed region the LEP has identified the need for greater investment in infrastructure, in activities related to the environment and in bedrock industries such as food and drink, tourism and culture. The latter sectors would be eligible for the suite of finally agreed activities, where there is demonstration of high growth potential. This preliminary work will be subject to extensive consultation and discussion with stakeholders before the preparation of the first draft Structural and Investment Fund Strategy in September 2013. Section 2 - Financial Instruments The LEP will consider national approaches to Financial Engineering instruments, venture capital and some aspects of other loans on an ‘opt-in’ basis providing there is a sufficient flexibility to tailor and brand the provision locally. However, the LEP also wishes to commission locally designed ‘revolving’ funds, potentially both for micro-business finance, for elements of infrastructure and for specific approaches to key sectors such as Low Carbon, cultural and social enterprise.

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Section 3 - Freedoms and Flexibilities Alongside the work on priorities, the LEP and its sub-groups have identified a number of freedoms and flexibilities that would ensure that a fully integrated programme of investments, tailored to the Less Developed region, can be put in place. The principal items are:

• The further delegation of responsibilities to Cornwall and the Isles of Scilly through an Integrated Territorial Investment which regionally targets the national Operational Programme to strategically integrate multiple European funds to contribute to our unique local economic, social, environmental and territorial development priorities. This includes identifying, using well developed evidence, those elements of all four Structural and Investment funds where we can add value through a more local approach. This will be the subject of a separate submission to Government.

• Relaxation of State Aid rules for larger companies where they are a critical part of the supply chain, especially in bed-rock industries.

• The maximum use of flexible intervention rates within the ring-fenced allocation of funds. • Community Led Local Development, drawing on all four EU funds and covering 100% of the LEP area.

Governance The LEP has also begun work on governance structures, for both the preparation of the Structural and Investment Fund Strategy and for its implementation once agreed with Government. This includes full engagement with environmental, voluntary and community groups and the inclusion of Local Action Groups within strategic and delivery aspects of the Strategy. The LEP has established a group to look at the governance requirements for the Structural and Investment Fund Strategy in Cornwall and the Isles of Scilly, and any investment priorities that flow from this. In order to ensure that all sections of the economy are fully able to contribute to the economic growth of the area, especially the social economy and the voluntary and community sectors, it has been identified that funding would be sought from EU Thematic Objective 11 – Institutional Capacity. More detail will be proposed in the draft Structural and Investment Fund Strategy.

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Summary Mapping shows that while the emerging priorities set out in the Government’s preliminary guidance potentially provide support for a majority of the LEP’s initial priorities, there are some significant divergences from the identified and evidenced needs of Cornwall and the Isles of Scilly.

Section 1 - Initial Priorities

While the Cornwall and Isles of Scilly Structural and Investment Fund Strategy will draw on funding from each of the above priorities, there is also an emphasis on the following: ICT Low Carbon Economy Promoting Sustainable Transport and Removing Bottlenecks in Key Network Infrastructures Climate Change Protecting the Environment and Promoting Resource Efficiency Institutional Capacity Non SME Competitiveness i.e. Businesses above 250 Employees and Micro Businesses

At present, there is weight on five priorities at national level: Innovation SME Competitiveness Skills Employment Social Inclusion

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The spread of investment across all 11 EU Thematic Objectives is to be expected in a Less Developed region, and coincides with the key findings of the evidence base, which will be fully set out in the draft Structural and Investment Fund Strategy. As the only Less Developed region in England, Cornwall and the Isles of Scilly will have a ring-fenced budget within the proposed Growth Programme. As such we understand that concentration of the thematic priorities will also be treated separately from those in other LEP areas, and should not factor in national calculations and according to the following expected concentration of activities as set out by the EU, i.e.

We will present a locally based prioritisation of the funds in the draft Structural and Investment Fund Strategy at the end of September. This will also include emphasis on bedrock sectors such as food and drink and tourism, and the contribution that culture can make to the LEP’s Growth Strategy. In terms of the food and drink supply chain, the exact scope of this work needs to be agreed with DEFRA to ensure that it complements any national rural development activity supported by the national EAFRD programme. At this stage, the term “food and drink” should be taken as shorthand for activity involving adding value to products included in the annex 1 nomenclature of the Treaty of Rome. The LEP Priorities Cornwall and Isles of Scilly LEP carried out an extensive consultation exercise during 2012 in order to establish its Economic Growth Strategy for 2012-2020. The Strategy made it clear that it, together with the economic development strategies of the Local Authorities, it would be the driving force to inform the prioritisation and resource allocation of European funding programmes. Therefore, the initial response to the guidance is based on that Economic Growth Strategy.

At least 60% of the ESF to be invested in up to four investment priorities within the following: Employment, Skills, Social Inclusion and Institutional Capacity

At least 10% of the funds to be invested in: Low Carbon

At least 50% of the funds to be invested in: Innovation, ICT, SME Competitiveness and Low Carbon

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The Strategy has four priorities, shown in the diagram below:

The LEP and partners have established a sub-group for each priority, and these sub-groups have prepared a response to the preliminary guidance. Each sub-group has reviewed the priority, and its indicative activities against the EU Thematic Objectives, and the following is the result of that mapping. Note that these sub-groups, and an extensive consultation network, will form the basis of the preparation of the first draft Structural and Investment Fund Strategy for September 2013. In setting up the groups and consultation networks, the LEP has paid special attention to the need to fully reflect the Social and Environmental aspects of the EU funds. It is important to note that at this time we have not specifically set out areas where collaboration with other LEPs is a priority, but these are under consideration (and discussion) with other LEPs and will be included in our draft Structural and Investment Fund Strategy.

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EU Thematic Objectives: 1 - Innovation 2 - ICT 3 - Enhancing the Competitiveness of Small and Medium Size Enterprises 7 - Promoting Sustainable Transport and Removing Bottlenecks in Key Network Infrastructures

Issues for the Growth Programme that might fall outside its scope: A30 dualling to unlock business investment Isles of Scilly transport link Value of tourism and agriculture to the economy (we recognise the need to dovetail all our activity with any future national rural development programme which may include activity that will support these valuable sectors. However, it is important to recognise that the economic development needs of rural areas will not be totally catered for by EAFRD and this fund should not become the default option in rural areas)

Priority 1

Inspiring business to achieve their

national and global potential

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LEP Aim Potential Local Activity EU Theme 1 Innovation

EU Theme 2 ICT

EU Theme 3 SME Competitiveness

EU Theme 7 Transport Infrastructure

Build on existing bedrock business, new industries and key sectors and attracting new business.

Provide tailored support service to businesses, including Social Enterprises and micro businesses, wishing to grow, or improve efficiency including peer-to-peer, coaching, mentoring and non-executive directors. Afford access to business information and advice to existing businesses, including Social Enterprise, with the ability to create jobs (not just high growth businesses). Business start-up service. Joining up links and processes between businesses, their supply chains, innovation and finance to maximise growth opportunities. Inward investment campaign. Harnessing the full potential of the Cornwall and the Isles of Scilly brand. Utilising our cultural, heritage and related tourism assets to raise productivity and tackle seasonality.

Supporting those looking to start and grow a business. Strengthening local and national supply chains and improving productivity and manufacturing performance.

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EU Theme 2 ICT



A supply chain initiative that would be made up of a range of activities designed to improve competitiveness and productivity This may include lean production methods, transport, distribution and logistics, business support, advice and mentoring, marketing and PR, business development grants and loans.

Make it easier for Micro, Small and Medium Sized Enterprises to get the right sort of business support and access to finance.

Provide a central point of contact for businesses, including Social Enterprises, to access business development support. Implement Cornwall and Isles of Scilly client relationship management function to co-ordinate relevant business development support (hiding the wiring). In addition to continuing to support high growth and growth potential businesses, ensure all businesses with the ambition and capacity to develop and create additional employment have access to and can benefit from a range of suitable support services and mechanisms.

Supporting Small and Medium Sized Enterprises to commercialise Research and Development and support the businesses to take risks and innovate.

Ensuring a flexible mix of finance is available for different stages of business development and sectors where markets are currently failing Small and Medium Sized Enterprises. Ensuring business financial readiness. Supporting those looking to start and grow a business through capability building.

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EU Theme 2 ICT



Export service. Facilitate innovation within businesses through proof of concept funding.

Encouraging businesses to export and access new markets.

Remove obstacles to growth such as infrastructure and transport.

Facilitating the benefits derived from “clustering” in supply chains and developing incubator units, grow on space and service hubs for new and emerging businesses. Flexible package of investment finance to include lending all appropriate types of finance to all types of business in Cornwall and the Isles of Scilly including innovation finance, equity and other financial instruments and mechanisms that are tailored to the needs of Social Enterprises. Resolve the Cornwall and Isles of Scilly transport link.

Ensuring that there is an adequate supply of incubation space and support services to support the next generation of high growth business.

Improving connections - both local transport networks and key gateways linked to the TEN-T network (road and rail). Improvements to the wider railway network.

Ensure businesses connect with each other and nationally and globally.

Next stage investment in digital infrastructure to boost speeds, to provide alternative technologies where needed, to extend FTTP footprint and to upgrade FTTC. Demand stimulation programme to drive exploitation of digital

Higher level workforce skills to support innovation.

Promoting the take-up and exploitation by Small and Medium Sized Enterprises and communities of emerging

Encouraging Small and Medium Sized Enterprises to export and target new markets.

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EU Theme 2 ICT



technology. Development and delivery of skills programmes relevant to the exploitation of digital technologies. Future investments in broadband connectivity to ensure that businesses have the opportunity to maximise the benefit of increased bandwidth. Facilitate links with national and international suppliers, collaborators and markets.

technologies and networks for the digital economy. Higher level workforce skills to support development and to exploit the technology.

Establish a successful Enterprise Zone and promote the establishment of others.

Inward investment programme incorporating the Enterprise Zone as a key offer.

Ensuring that there is an adequate supply of incubation space and support services to the next generation of high growth business.

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Freedoms/Flexibilities This Priority has identified the following specific further flexibilities that are required to support the achievement of its objectives:

• To ensure efficiencies within the overall Growth Programme and related funding streams, Government Departments need to collaborate to ensure a streamlining of systems and processes e.g. common application, claiming and audit processes.

• The programme should consider a flexible approach to output targeting and information gathering to promote the benefits of providing business support developed on a holistic rather than a project by project basis.

• Scope to be able to target new business investment from the UK and EU (i.e. not displacement) rather than just non-EU foreign direct investment.

• The ability to design and locally implement finance programmes which are unique to and fit for Cornwall and the Isles of Scilly which work alongside any national and regional collaborated funds.

• The ability to allow limited investment in road infrastructure where this contributes to the wider achievement of economic aims and targets.

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EU Thematic Objectives: 1 - Innovation 8 - Promoting Employment and Supporting Labour Mobility 9 - Promoting Social Inclusion and Combating Poverty 10 - Investing in Education, Skills and Lifelong Learning The three key principles for the programme to work within are:

o To prevent exclusion from happening o Re-integration of those who have become excluded o Delivering equality of opportunity for all through co-designed solutions

Issues for Growth programme that might fall outside its scope: Use of Structural and Investment Funds to improve pre-16 guidance for those at risk of under-achievement.

Priority 2

Creating great careers here

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LEP Aim Potential Local Activity EU Theme 1

Innovation

EU Theme 8 Promoting Employment and Supporting Labour Mobility

EU Theme 9 Promoting Social Inclusion and Combating Poverty

EU Theme 10 Investing in Education, Skills and Lifelong Learning

Identify future market opportunities and skills needs.

Development of skills in the bedrock and potential growth sectors (e.g. care, food, hospitality, leisure, cultural, creative and tourism sectors) and skills transferability to new growth sectors. To prevent exclusion from happening by developing mechanisms to offer living wage targets covering median salaries addressing in-work poverty. Investment in mechanisms to improve the quality and reach of information, advice and guidance linked to increasing aspiration and attainment levels of young people. Promoting interaction between business and FE/HE to develop the careers of the future.

Responding flexibly to employer demand in local labour markets where specific needs are identified by the Local Enterprise Partnership and their partners. Developing targeted skills programmes around major inward investment/growth opportunities to anticipate and exploit opportunities for new markets, alongside targeted support for re-skilling as a result of business closures/redunda

Ensuring that all, especially the vulnerable, are provided with the personalised support they need to find information, advice, guidance and access to funded support measures. Providing mechanisms to increase equity and bridge the gaps faced by individuals and families to secure economic inclusion for all Help young people furthest from the labour market through locally provided services that connect young

Support to address skills gaps in the rural, green economy and the challenges of fragmented business networks in rural areas. Support for structural change in the local economy to meet skills gaps at all levels, including for Small and Medium Sized Enterprises and the social economy. Establishing coherent and effective employment and skills plans for important

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ncies. people and employers.

economic growth opportunities.

Broker a stronger dialogue between business and trainers and educators.

Undertake activity that will develop people across all tiers of a business structure via continual professional development and mentoring. Develop sustainable models that support people (including students) to work in partnership with education and others to address 2nd level responses to local needs.

Responding flexibly to employer demand in local labour markets where specific needs are identified by the Local Enterprise Partnership and their partners.

Work to promote interaction between business and Higher/Further Education providers to meet local business needs. Developing better links between business and schools, Higher/Further Education providers and other education partners to equip students with the skills to start and grow a business.

Develop skills of all workers to match jobs.

Encouraging increased participation and attainment of higher level and research/postgraduate skills to

Higher level workforce skills to support Research &

Additional and innovative approaches to support and

Additional and innovative approaches to training for the

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support the growth of Research & Development and innovation in business.

Development and innovation.

motivate young people with no or few qualifications into training and the workplace such as additional support that harder to reach young people will require to successfully complete a traineeship. Encouraging increased skills attainment of employees with no or low level qualifications. Supporting the development of apprenticeships as a key investment tool in skills by employers.

unemployed, including marginalised groups, to help bring them to and support them in learning. Additional or innovative approaches to training in a vocational context for those with low level skills in Maths and English, to support them in finding work or progressing in work; and to enable them to achieve vocational qualifications and continue to upskill. Support for intermediate and

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EU Theme 10 Investing in Education, Skills and Lifelong Learning high level vocational provision for the unemployed and for career progression. Supporting low skilled people in low paid work to help them progress and for apprenticeships in related projects. Support for upskilling and retraining for industries identified in investment strategies including training costs.

Work with employers and trainers to make Cornwall and the Isles of Scilly a

Develop career paths and broker the sharing or skills and expertise across the supply chain including enhancing schools and providers’ understanding of the

Providing additional or more intensive support to help people to move

Providing additional and/or more intensive and flexible support tailored

Encouraging the development of entrepreneurial skills and opportunities for

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great place for individuals to design and start careers irrespective of starting point.

workplace. Development of young people’s entitlement to quality experiences of the world of work including young people in vulnerable groups. Improve the quality of and access to information for learners, employers, colleges, universities and training providers to enable strategic development and more informed decision making. Reduce early school leaving and disengagement through early intervention (pre 15) particularly for young people with multiple disadvantages. Exploit the knowledge, resources and skills of higher education to benefit business

towards work, enter work (including self-employment), and to progress in work. Additional and innovative approaches to pre-employment training. Additional support for long-term unemployed people, including those who have left the Work Programme, and including new approaches to work experience and training. Providing additional support to specific target

to the needs of people who are furthest from the labour market. Supporting bottom-up active inclusion activity in particular geographic locations, for example, through community led local development. Helping grow the social investment market to support social enterprises and the social economy. Developing the capacity of social entrepreneurs to address the needs of their

young people. Encouraging opportunities for self-employment and entrepreneurial development later in life. Support for informal learning and community based learning. Support specific activities to promote equality and diversity, retention, widening participation, progression and employability in higher education; particularly related to the raising of aspirations

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groups such as people with disabilities or health barriers (including mental health issues), people with caring responsibilities, lone parents, ethnic minorities, ex-service personnel, and ex-offenders. Helping older workers to re-enter or stay engaged in the labour market. Training workless people who need to upgrade their skills or learn new skills (including basic skills and English for speakers of other languages)

local communities. Promote a dynamic and inclusive rural economy with fair access to services and basic amenities. Developing the capacity of community groups to participate in the delivery of services to those furthest from the labour market.

towards improved economic and social outcomes. Reduce early school leaving and disengagement through early intervention (pre 15) particularly for young people with multiple disadvantages.

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to compete in the local labour market and adapt to changes in the economy.

Freedoms/Flexibilities This Priority has identified the following specific further flexibilities that are required to support the achievement of its objectives:

• Supporting training activity that goes beyond national policy targets i.e. second level 2 qualification.

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EU Thematic Objectives: 1 – Innovation 2 - ICT 3 - Enhancing the Competitiveness of Small and Medium Size Enterprises

Priority 3

Creating value out of knowledge

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LEP Aim Potential Local Activity EU Theme 1

Innovation

EU Theme 2 ICT


Promote and broker world class research in key centres.

Engagement and partnership with national, European and international supply chain research programmes. This will include knowledge transfer and extension activity. Develop Research & Development facilities and activities designed to meet the needs of supply chain. Promote collaborative research by assisting academic institutions to promote links with private sector and other HE institutions through vehicles such as the Academy of Innovation and Research and the Environment and Sustainability Institute.

Innovation activities which contribute to low carbon goals, resource efficiency and protecting the environment, while maintaining the focus on business investment in research and innovation. Higher level workforce skills to support Research & Development and innovation. Support for innovation actors including enterprises, social economy, research centres or universities to promote social innovation and innovation in health.

Identify any knowledge-based resource where there is untapped potential.

New product/process/market development in the Utilise networks and existing facilities to broker business Research & Development opportunities.

Building collaborative research between enterprises, research institutions and public institutions. This can include graduate start-up schemes and

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EU Theme 2 ICT


Nurture and exploit the potential of world class research and learning centres. Activity to increase business innovation through engaging a broad base of businesses, sector and technology-blind, in a range of innovation activities. This will include innovative starts from the Universities and Colleges as well as work with existing businesses Supporting sectors where Cornwall and the Isles of Scilly is, or has the potential to be, a world leader in research and innovation.

support for other Higher Education Institution spin-outs delivering innovation, including social enterprises. Supporting Small and Medium Sized Enterprises including social enterprises to commercialise Research & Development i.e. bringing new products to the market, especially those linked to key enabling and health science technologies. This can include stimulating the demand for new services and products, and public procurement programmes designed to drive innovation.

Ensure that workspace that is available is fully geared to the needs of knowledge based businesses at every stage.

Investing to enable infrastructure that unlocks strategic areas for business expansion – for example grow-on accommodation for businesses graduating from innovation centres student / graduate start-ups and

Physical infrastructure for innovation including incubation space for new enterprises active in innovation linked to research institutions.

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EU Theme 2 ICT


university spin out businesses and use of existing environments where business support and community is already in place Advance the operations of the innovation centres by promoting activities that develop them as the focal point for key clusters and by increasing the impact of innovation centres.

Make it easier for enterprises to find sources of finance, including investment and also help businesses get ‘investor-ready’.

Creation of investor networks. Develop opportunities to access investment and working capital.

Ensuring a flexible mix of finance is available for different stages of business development and sectors where markets are currently failing Small and Medium Sized Enterprises. Ensuring business financial readiness.

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Freedom/Flexibilities This Priority has identified the following specific further flexibilities that are required to support the achievement of its objectives:

• Freedom and flexibility to ensure we can deliver innovation outside of a national framework which would be prohibitive to our business base

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EU Thematic Objectives: 1 – Innovation 3 – Enhancing the Competitiveness of Small and Medium Size Enterprises plus Larger

Businesses where it can deliver the Required Benefits 4 – Low Carbon 5 – Climate Change 6 – Protecting the Environment and Promoting Resource Efficiency NB: In addition, this LEP priority would envisage significant investment from the proposed national EAFRD and EMFF programmes, which sit outside the Growth Programme outlined in the preliminary guidance. This issue is dealt with separately within our response to Freedoms/Flexibilities.

Issues for Growth programme that might fall outside its scope: Upgrading of Cornwall and the Isles of Scilly’s electricity and gas grid to improve capacity for growing renewables sector. Dredging of Falmouth Harbour in support of development of marine energy sector. Value of agriculture and fisheries to the economy. Suggested alternative wording – support for agriculture and fisheries per se will be provided by national EAFRD and EMFF programmes but we would ask for the opportunity to inform the design and delivery of these programmes to ensure that they are responsive to the needs of our area. In addition we would like to adopt a wider food and drink supply chain approach under our SIF that aligns EAFRD, ESF and ERDF into activity designed to improve the competiveness of this important sector.

Priority 4

Using the natural environment

responsibly as a key economic asset

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EU Theme 4 Low Carbon

EU Theme 5 Climate Change

EU Theme 6 Protecting the Environment and Promoting Resource Efficiency

Work to attract investment to grow renewable and marine sectors.

Working with partners from across the South West to develop and promote the area in respect of marine renewables, including through the South West Marine Energy Park (SWMEP). Supporting and promoting initiatives led by the private sector in the field of geothermal energy. Exploring scope for wider development of geothermal power and accessing investment opportunities. Supporting and promoting initiatives led by the private sector in the field of anaerobic digestion with a particular focus on gas injection and bio methane production for road fuel use. Falmouth Harbour Master Plan to support marine, renewables and

Support for activities that realise and enhance the job-creation capacity of the low carbon sector (in particular via new skills needs, company growth and domestic retrofit).

Investment in green infrastructure to support sustainable economic development.

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tourism sector development. Support businesses that also contribute towards protecting our environmental assets.

Supporting development of eco-construction, including via St Austell and Clay Country eco-community. Promoting and championing low impact construction (recognising that the construction sector is an important economic driver and significant housing growth is planned).

Support the non-domestic sector to develop low carbon technologies and focus on energy efficiency which is the most cost efficient way of reducing emissions.

Promoting innovative technologies that address environmental protection and resource efficiency for businesses and communities.

Support the development of high value markets for local food, farm, fisheries and eco-tourism products and services.

Developing and exploiting the Cornwall and Isles of Scilly brand through looking at opportunities to grow the high value market.

Encouraging Small and Medium Sized Enterprises to export and target new markets. Strengthening local and

Actions to promote ecosystem services that support growth, and jobs.

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national supply chains and improving productivity and manufacturing performance.

Ensure all business can easily find advice and any incentive support to reduce their impact on the environment.

Resource efficiency advice, guidance and support as part of a wider programme of support to develop “greener” food and drink supply chains.

Innovation activities which contribute to low carbon goals, resource efficiency and protecting the environment, while maintaining the focus on business investment in research

Ensuring a flexible mix of finance is available for different stages of business development and sectors where markets are currently failing Small and Medium Sized Enterprises. Ensuring business

Activities that accelerate the development, innovation, adoption, deployment and cost reduction of low carbon technologies and related supply chains/ infrastructure.

Investment in resource efficiency measures that improve business performance.

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and innovation.

financial readiness.

Promote Cornwall and the Isles of Scilly as a ‘green exemplar’ developing a concept of ‘environmental growth’ using economic prosperity to enhance the environment.

Green Cornwall programme. SMART grids. Upgrading of Cornwall and the Isles of Scilly’s existing grid. Agri-environment schemes.

Development of “whole place” low carbon solutions (including heat and cooling networks, urban design, sustainable urban mobility, decentralised and off grid energy systems, community energy solutions, demand management and climate change

Growth Funding could be used to complement and match Flood and Coastal Erosion Risk Management investment enabling appropriate (and National Planning Policy Framework compliant) economic growth outcomes, measurable by associated

Investment in green infrastructure to support sustainable economic development. Promoting innovative technologies that address environmental protection and resource efficiency for businesses and communities. Actions to promote ecosystem services that support

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adaptation measures.

land supply, jobs enabled and net value added outputs.

growth, and jobs.

Freedoms/Flexibilities Identified freedoms and flexibilities for this priority are detailed in section 3 of this document.

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The LEP’s Economic Growth Strategy envisages that Cornwall and the Isles of Scilly will have a GDP per head above 75% of the EU average by 2020. A reduction in grant dependency and the ability to generate the maximum value from every Euro invested is vital to the sustainability of such economic performance. Therefore, the LEP welcomes moves in the preliminary guidance to put in place venture capital and loan arrangements within the Growth Programme. Finance readiness and access to finance are key planks of the LEP’s strategy for business growth and we would expect to make use of both models outlined in the guidance. Given the contribution made to our economy by the agri-food sector we would also like to explore the use of financial instruments in this sector as well. We have some experience of this from the Objective One EAGGF Programme where we ran a very small loan fund for new entrants into the agricultural sector. This may therefore require consideration of EAFRD supported financial instruments. Any arrangements that are put in place, whether at a national or local level, would need to accommodate the specific needs of Social Enterprises in accessing finance products. Whilst we understand the rationale, from an administrative and compliance perspective, for a single, national venture capital fund, we would look to deliver this fund under a Cornwall and the Isles of Scilly brand, and would like to operate within an opt-in model. We are concerned to ensure that, in the event of a national top-slice, the amount ring-fenced nationally is not disproportionate. In particular, we would want to ensure that the differing intervention rates (i.e. up to 80% in Less Developed regions) are taken account of and that the ring-fence for Cornwall and the Isles of Scilly is strictly protected and does not cross-subsidise other areas. This is a particular concern within the design of the national EAFRD rural development programme. Whilst we agree that equity funds may be more effective on a larger scale, they also have to be accessible to business, particularly when businesses are at an early stage. As the South West has not had either a major European funded regional equity scheme or, we believe, significant investment from the national providers of such funds, we consider that the South West is underprovided in the provision of venture capital finance. As we do not have a JEREMIE structure, we would propose that such a fund is developed using existing management structures and legacy funding. This solution would also provide a clear and efficient accountability link to Capital for Enterprise Ltd, the future Business Bank and DCLG.

Notwithstanding the above we recognise that by working in collaboration with other regional LEPs on financial instruments for finance for business, we can achieve bigger impact, exploit synergies and achieve economies of scale.

Section 2 - Financial Instruments

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We would also intend to build on the existing loan fund arrangements in Cornwall and the Isles of Scilly to ensure that there is a locally relevant fund available. This would be closely linked to our aspirations in relation the ‘green economy’. Given the importance to the economy of the Higher Education sector in Cornwall and the Isles of Scilly, and the continuing need to drive up aspirations amongst the area’s young people, we are committed to the concept of removing the financial barriers for individuals, consistent with national policy. This will contribute to the growing knowledge base within our economy.

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Whilst the LEP and partners welcome the greater control over project development and selection that the preliminary guidance offers, we are disappointed that the guidance offers little by way of differentiation for the only Less Developed region in England. Cornwall and the Isles of Scilly wishes to discuss with Government a number of areas where it is felt that there could be greater devolution to the area which would, in return, offer more local growth than otherwise. These include:

1. The wish to discuss alignment of Growth Programme funding with other funding streams, beyond the Single Local Growth funds and operate a ‘City Deal’ model in Cornwall and the Isles of Scilly.

2. The establishment of an Integrated Territorial Investment for the area, which would bring with it greater integration of

all EU and other Government funding including greater elements of the EAFRD and EMFF programmes than envisaged, additional match funding from local partners and greater return on investment. The detail of the ITI is contained in a separate paper that we are submitting to Government alongside this initial response.

3. Within the ITI we will develop and support a programme of Community Led Local Development across all four CSF

funds which covers the entirety of the Cornwall and the Isles of Scilly region to enable grass root level economic growth. We envisage a more direct relationship between the LEP and the Local Action Groups than that set out in the guidance.

4. Relaxation of the State Aid rules for Cornwall and the Isles of Scilly and in relation to investment in larger companies

where these are a critical part of the supply chain. In addition:- a. For EAFRD the current state aid rules are restrictive. The annex 1 in/annex 1 out ruling makes it difficult to

engage with businesses further up the supply/value chain and whilst it is possible to use lower intervention rates (20% or 10% for large businesses) this is also restricted by de minimis (€200,000). De minimis also applies in other areas e.g. farm diversification which makes it difficult to engage and support larger projects. A simpler state aid regime e.g. block exemption would simplify delivery, make it easier to communicate with businesses across the supply chain and would ultimately encourage additional growth.

b. For EAFRD a higher per capita budget allocation (within the SIF programme and within the national rural development programme) will enable a wider range of activity to be supported. In addition the ability to offer

Section 3 - Freedoms/Flexibilities

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support (via the SIF programme) that is additional to the national rural development programme will maximise the opportunity for growth and accelerate our economic performance

5. The maximum use of flexible intervention rates, predicated on an 85% intervention rate for the Less Developed region

funds within the Growth Programme, and the ability to fund individual projects – where appropriate – at 100%. 6. The recognition that the achievement of hard outputs within the seven-year life of the Growth Programme might not

always be achievable. There is a need to acknowledge that up to 25-30% of the funds might be invested in projects that will contribute to the long-term transformation of the area’s economy, but not necessarily achieve measurable outputs for the programme.

7. The following have also been identified in support of specific LEP priorities:

a. The programme should consider a flexible approach to output targeting and information gathering to promote the benefits of providing business support developed on a holistic rather than a project by project basis.

b. Scope to be able to target new business investment from the rest of the UK and EU (i.e. not displacement) rather than just non-EU foreign direct investment.

c. The ability to design and locally implement finance programmes which are unique to and fit for Cornwall and the Isles of Scilly which work alongside any national and regional collaborated funds.

d. The need to allow limited investment in road infrastructure where this contributes to the wider achievement of economic aims and targets.

e. The ability to have a higher percentage of match funding/ direct funded sources and mechanisms as opposed to being tied to a co-financing model for all delivery

f. Acceptance of volunteer time as a match funding source, for key social inclusion activities. g. Supporting training activity that goes beyond national policy targets i.e. second level 2 qualifications; supported

level 3 qualifications in key areas; non-age restricted delivery to the over 24s to ensure that ESF adds value to mainstream activity effectively.

h. Allowance to drop below the proposed 15 / 16 age groups for key interventions that develop young peoples' aspiration and access to the world of work through early intervention and prevention work.

i. To allow innovation support outside of a national strategy which will enable the businesses of Cornwall and the isles of Scilly (who are largely not in a position to attract TSB funding) to develop sufficient capacity and capability to successfully attract national innovation funding.

j. Freedom and flexibility to deliver innovation and R&D support to the sectors identified as key to the SME base in Cornwall and the Isles of Scilly whether this is reflective of nationally identified key sectors or not.

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Cornwall and Isles of Scilly LEP and its partners look forward to discussions with Government as our priorities are refined over the next few months. We are well prepared for the completion of a draft Structural and Investment Fund Strategy by the end of September, and have put in place a comprehensive consultation programme. We impress upon Government the unique circumstances in the region, the strong track record of delivery in previous EU programmes and our clear strategy for economic growth. As such, we also look forward to discussions about separate Freedoms and Flexibilities that can be granted to Cornwall and the Isles of Scilly.

Conclusion

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eu structural and investment fund strategy 2014-2020

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