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The Adonis Economic Review - where next for the North East?

The Adonis Economic Review has been warmly welcomed by business and now needs to be adopted. As part of this, the North East’s seven local councils are creating a Combined Authority known as LA7 and that this should achieve statutory governance by spring 2014. Those in charge are already working with the North East LEP to develop a Growth Deal and Strategic Economic Plan and it is a privilege to be part of the External Advisory Group taking this forward.

With this in mind, it was disappointing to see the media report some of the adverse comments by MPs on the Adonis Economic Review. These comments appear to (wrongly) imply that there is a disconnection. In fact, for the first time in many years, the local councils and the business communities are at one to deliver much needed economic growth in a challenging market. Were these unhelpful remarks designed to be politicking? If so, it would have been far better to have judged the growing mood in the region that ‘what’s good for the region is good for us’.

MPs should instead be focusing on what can be done to help the region become competitive and attractive to Foreign Direct Investment and what we can do to encourage small local businesses to grow. We have as a region changed significantly over the last couple of years. Our dependency upon handouts from government has gone, along with the realisation that grants, whilst short-term palliatives, do not create the basis on which to achieve strong economic growth - or a much stronger base from which to operate and compete to attract new businesses and increase jobs.

The North East LEP has achieved much progress despite the economic recession. Just look at the facts surrounding the North East LEP Investment Fund. This started out with the Growing Places Fund having about £24.7 million to kick-start stalled development, by supporting the first stage of expenditure in development with loans for improving sites with infrastructure, remediation and site services. This was more recently added to with £30m of Regional Growth Fund Round 3.

Over the last 18 months it has allocated £22.8m to 11 projects, leveraging an additional £110m of expenditure to create over 1,300 jobs directly, 2,334 jobs indirectly. A further two projects from the Growing Places Fund remain in reserve and could call on a further £3.4m of funds. The allocation of 92% of the Growing Place Fund to accelerate development in across the LEP area, now means that initiatives are projected to have spent over 48% of the fund by December 2013, 58% by end March 2014.

The Fund is an ‘evergreen fund’ designed to use the repayments of the loans to fund other future projects. Repayments to the fund are starting from January 2014, and significantly increase in volume in return through 2014/15 with over 40% the fund replenished by the first quarter of 2015/16 (circa £10m).

The Regional Growth Fund allocation to the North East Investment Fund, has resulted in a varied pipeline of proposals being progressed with representative from both the private and public sectors. Currently nine projects are in development to application stage, with further enquiries being fostered. They include projects increasing activity in the offshore and subsea marine industries; installing superfast IT infrastructure, in addition to accelerating property developments on a number of our business and industrial estates. This variation displays the innovative approach being taken to funding through the North East Investment Fund now that in addition to loan financing, consideration is being given to taking equity stakes in regionally strategically significant projects.

In summary, this pipeline of projects is seeking over £33m of North East Investment Fund money. Should they come to fruition they will be leveraging over £375m of public and private additional expenditure in the economy and creating an additional 3,500 jobs. Crucially for the Regional Growth Fund, these proposals will spend and deliver within the initial two year programming period set.

Throughout this success, the Fund continues to seek interest from businesses, developers and contractors. Whilst the Fund must not be anti-competitive to commercial bank lending, it will consider applications where banks are unwilling or unable to lend and will also look at positions to supplement bank lending where further funding is required. It has been a very positive and welcome development indeed.

This was posted in Bdaily's Members' News section by JK Property Consultants .