CoalitionGovRegionalGrowthFund.docx - RTC North

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Growth Fund Consultation

St. Mary’s House

9
-
11 London Road

Sheffield

S2 4LA











02
nd

September 2010



Dear Sirs


Coalition Government Regional Growth Fund
Consultation


Thank you for inviting us to contribute to the Government’s Regional Growth Fund (RGF) Consultation. We
are responding on behalf of, and as examples of, successful industry led Cluster organisations e.g. NEPIC,
Humber Chemical Focus and
Yorkshire Chemical Focus that have worked in partnerships with the public
sector to deliver economic development and growth goals associated with one of the UK’s most successful
industrial sectors, the chemical and process industries. The consultation docu
ment clearly sets out the
Gove
rnment’s key RGF objectives of:


Encourage private sector enterprise by providing support for projects with significant potential for
economic growth and create additional sustainable private sector employment; and


Support i
n particular those areas and communities that are currently dependent on the public sector
make the transition to sustainable private sector le growth and prosperity.


On behalf of the chemical and process industries in the Northeast of England and in Yo
rkshire and
Humberside (NE and Y&H), as represented by our extensive regional memberships and achievements in
local partne
rship working, (see Appendix I)

we believe that further support for this sector thorough the
deployment of RGF remains an attractive o
ption for Government and the tax payer in delivering these
objectives. We would also assert that our organisational models with their strong local business
participation, leadership and sector focus are effective platforms to articulate economic developmen
t
priorities as well as offering fully accountable and viable and efficient vehicles for project development and
delivery.


The NE and Y&H areas contain a substantial proportion of the UK chemical and process industries which
have continued to successfull
y grow and diversify through investment and innovation. (See Appendix I for
examples). These areas are centres of high value advanced manufacturing and are also declared
destinations for further and related major investments in new industries e.g.




Renewab
le Energy Generation, Supply Chains, Distribution



Carbon Capture & Storage



Industrial Bio
-
technologies



Advanced Engineering & Manufacturing


These developing industrial activities represent the new growth hubs but they have parallel characteristics to
the

existing chemical & process industries in their capital, science and skills intensity. Our experience is
that these hubs are and will be the dynamos for the development of new supply chains and business growth
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across the regions industrial base and provi
de immense opportunities to address with appropriate RGF
support the two key objectives above.


In addition we would further assert that growth opportunities continue to exist for regional business and
enterprise in for example:


Maintenance a
nd life extension of the existing on and off
-
shore, oil & gas, chemical & process industry asset
base.


Development of professional services based on legacy skills e.g. providing educations, skills, learning,
consultancy and professional services to the gl
obal chemical, oil, gas and process technology sectors.


We believe the RGF is a critical instrument in providing local resources to leverage the economic
transformation of our sectors and the attraction of further private investment and business establishment.
We also believe previous investment by the private
sector in partnership with Government has created
organisations such as ourselves that can support this change and delivery at a local regional level.


Response to Consultation Statement & Questions



Coalition agreement


“We want to create a fairer and more balanced economy, where we are not so dependent on a
narrow range of economic sectors, and where new businesses and economic opportunities are
more evenly shared between regions and industries.”


To achieve a more bala
nced economy we believe the UK economy while remaining dominated by the
business services sector it has an opportunity to enhance the contribution from advanced manufacturing
and specialist service sectors. We assert the chemical and chemistry using indust
ries represent has an
important contribution to these and objectives via:


Operating across a wide geographical distribution in England and the UK with concentrations of business
clusters in key Northern Regions e.g. NE, NW and Y&H.


These clusters proving

‘hubs for growth’ and providing critical scale to attract new enterprise development in
related areas of Renewable Energy, Carbon Capture, Strategic Energy Infrastructure, Distribution and
Storage and Specialist professional services.


Several of these

clusters are located in areas currently with high levels of public sector activity and jobs and
therefore the opportunity to capitalise on the current clusters to grow GDP more quickly though private and
RGF investment will offer better and more sustainab
le opportunities to rebalance the local over dependent
economies.


The clusters are also some of the UK major centres for export led business and enterprise. Part of the UK
economy shift is to further use exports to enhance GDP growth. The chemical and che
mistry using sector
have one of the UK best track records in export led growth and contribution relative to all advanced
manufacturing sectors. An RGF focus on export led sectors would be welcome.


Consultation Question


1.

Are there benefits to be had from
allocating different elements of the fund in different ways?


Yes.


3


We recognise that business and enterprise is very diverse serving different customers and different
markets. The chemical and chemistry using sectors is probably one of the most diverse
relative to
product, service and affects offer.



We believe the benefits of allocation in a diverse fashion lies in the opportunity to encourage quality
projects and programmes that can provide a return on the investment as well as leveraging new
private sector investment. The challenge to the RGF is ens
uring it can cope with this diversity and
not slide, however convenient, in the previous one
-
size
-
fits
-
all programmes that have been so
common. We would also assert that the RGF should and must encourage growth proposals which
meet both good ROI and the s
ocial returns the government seeks in its objectives.


We would also assert that the allocation process must carefully take into account growth that is both
presented tactically and strategically. For example, relatively mature strategic sectors such as
E
nergy, Chemicals and the Process sector while not in the highest leagues of economic growth by
conventional GDP measures play a major part in the future UK economy, as well as providing long
term low carbon solutions to issues such as climate change. We ho
pe the RGF will consider the
transformation of our core industries with as much importance as the creation of new micro SME’s
for example.


Support for business and industry through clusters would ensure that key activities could be
sustained based on pr
oven experience on attracting business growth and jobs. These activities can
be jointly funded by industry and the private sector to an agreed set of targets with the context of a
RGF. In additional we are sure the Government aims are also maximizes EU eco
nomic support
funding from programme such as ERDF. A locally focused approach through cluster organisations
would help ensure this additional and important source of funds is fully leveraged. Funding could be
allocated according to the features of the ind
ividual Cluster needs and in close collaboration with
local LEP priorities.


Consultation Question


2.

What type of activities, that promote the objectives outlined above, should the fund support
and how should the fund be best designed to facilitate this?


In consultation with cluster membership groups we would suggest the following activities need to be
led professionally and are necessary. We recognise younger less sophisticated organisations may
need fewer working parameters and results driven targets.




Networking and Benchmarking


the network of members enables them to lower their
economic cost of information and knowledge access thereby contributing to their growth and
sustainability. In addition enabling best practice to be shared and efficient local i
nfrastructure
to be maintained.




Marketing and Promotion


Allow member and business to reduce the cost of market
information and opportunities, this is particularly important to supply chain SME’s.




Improve the quality and speed of economic consultation
and knowledge transfer to
Government.




Providing informed business leadership to the developing Local Enterprise Partnerships
(LEPs).




Provide and build specialist and expert advice service on business, technical, political or
stakeholder issues.

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Reducin
g the cost of investment by supporting local authorities in advising companies that
are considering making investments e.g. on Land and Planning issues as well as supply
chain contacts and how best to approach grant applications.




Acting as low cost vehicl
es for collaborative innovation, skills and technology.




Proving key economic data and information by maintaining critical and specialist knowledge
of relationships, local infrastructure


knowledge of particular value to the integrated
businesses and
factories.




Focusing the Low carbon activities of the industry


(E.g. in NEPIC’s case Biomass and
renewable materials to products and Carbon capture and storage for the process sector.)




Proving a low cost route for government agencies to engage with busi
ness and the sector on
intervention policy and developments.


Consultation Question


3.

Do you think that these are the right criteria for assessing bids to the Regional Growth Fund?



We are concerned that the time
-
table for bid submissions runs counter to the need to develop local

and packaged proposals in the context of working with new LEP’s.


We would also stress that process does not discourage, as the words seem to imply, the op
portunity
to submit high quality bids but which are below the £1 million threshold suggested.


We believe the Governments process and panel needs special arrangement to encourage and
manage such submissions.


We would also assert that funding requests should be heavily supported by private industry,
particularly where Clusters are involved.


Assessment should also support areas and communities that are currently dependant on the Public
Sector as there will be
a transition period which will be needed to provide further private sector
growth.


For clarity and in the context of the growth and rebalancing comments on the UK economy we would
request further guidance on what constitutes ‘market failure’ criteria.


C
onsultation Question


4. Do you think we should operate a two
-
stage bidding process?


We believe that attracting good quality submission especially for strategic projects by December
2010 is a very challenging request given the current economic and publi
c sector environment.
However we welcome the idea of at least a two stage process. But in some circumstances a two
stage only bidding process may be too prescriptive. For example, in some instances for a Cluster,
local community issues and input may be of
critical importance
a
lthough the criteria for Region needs
definition too as examples Clusters could propose strategic projects assembled across multiple LEP
areas.



We would also request that the Government conducts the bidding process at business pace and

parallel best practice in investment assessment and that they request only the absolute information
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criteria to make a yes/no decision. It is not clear if there i
s an appeals process in the bidding or an

opportunity to re
-
submit projects.





The only aim of such funds should be to aid considerable private sector growth which will enable

long term economic and social and community benefits to accrue. Too ofte
n projects have been

supported for too short a period of time and this has resulted in the delivery of short term often trivial

results. A cluster led initiative while interested in short term issues is dedicated to providing long term

solutions via inv
estment in infra structure, skills and the identification of supply chain gaps and

opportunities.


Consultation Question


5. Should a Regional Growth Fund become a long
-
term means of funding activity that promotes
growth?



Yes.



For our type of econo
mic activity in the chemical and chemistry using global sectors then strategic

approaches, thinking and support is ultimately rewarded by their shareholders in terms on

investment in their business and growth.



Strategic delivery in business can take decades and a long term approach to support would be a

welcome. The scale and size of the chemical and chemistry using clusters hosted in the NE, NW and

Y&H have evolved over 50
-
60 years and has on average exceeded

UK GDP growth levels

consistently and represents one the country’s most outstanding science based manufacturing

success stories. It globalised well before the banking and financial services sectors and has never

requested a bale out in its long histor
y. These are the qualities and attributes we believe the UK

need in this century and the Government’s pursuit of a better balanced and export led economy.


As a sector and through the development of its innovative collaboration based cluster organisation
s it
believes it has much to offer in supporting this economic transformation. We believe the cluster approach
already provides evidence of where this strategic and long term approach from both the private and public
sector has made a real difference and
readily maps to the aspirations of RGF and its twin objectives.


Yours sincerely










Stan Higgins



Glyn Hughes




Ralph Gerrard

NEPIC




Humber Chemical Focus)


Yorkshire Chemical Focus

Wilton Centre



CATCH Centre



PO Box A38

Room H224



Kiln Lane




Leeds Road

Wilton




Stallingborough



Huddersfield

Redcar




North East Lincolnshire


West Yorkshire

TS10 4RF



DN41 8
TH




HD2 1FF

01642 442560



01469 552 840



01484 554 107


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Appendix I Background


About the Northeast Process Industry
Cluster (NEPIC).


The North East Process Industry Cluster is one of England’s most important industrial clusters, and has
made an enormous contribution in helping to deliver the government’s sustainable growth strategy, based
on private sector investment a
nd entrepreneurship. The Cluster has important multinational companies
amongst its 560 members such as SABIC, ConocoPhillips, BP, Dow, Lucite, BOC, SEMBCORP, INEOS
Nitriles, Johnson Matthey, Huntsman, sanofi
-
aventis, SSL International (Reckitt Benkieser),
Merck Sharp &
Dohme (MSD) and MSD Biologics, Aesica Pharmaceuticals, Shasun Pharma Solutions, Piramal Healthcare,
GlaxoSmithKline as well as many in newer industries such as Greenergy, Harvest Energy, Ensus and
Greenstar. Key supply chain organisations are

represented such as PD Ports, Simon Storage, Vopak and
almost all the UK’s leading process engineering companies such as ABB, Foster Wheeler, AMEC and Aker
Kvaerner etc. Several major power stations are also participating in the Cluster activity including

Europe’s
largest gas fired unit owned by Gas de Suez
.


NEPIC is a stand
-
alone not for profit company, limited by guarantee, which was created and owned by its
member companies to represent the companies and supply chain of the Process Industry in the regi
on.
Before NEPIC came into being, the process industry was regarded across the UK as being in decline.
Through our industry led thrust teams, we created a Strategy for Growth which suggested that by working
together we might identify and capture a portfoli
o of investments for the UK worth £9billion by 2015.
NEPIC’s current investment portfolio of real and active investment projects has reached £8 billion. These
are 65 projects, many of which would not be coming to the UK without NEPIC identifying the oppor
tunity.
The cluster has already delivered in excess of £3billion of investments to the country since 2003. Some of
the recently announced key investments that NEPIC identified and helped to attract
include Ineos

Bioethanol,

Pyreco Tyre
Reprocessing,

Air Pr
oducts Syngas Facility
, and

Mitsubishi Electric Battery
Chemicals
...

Some recently completed projects include the Sabic Polyethylene facility (the largest LDPE
facility in the world), Ensus Bioethanol (largest European facility
),

MSD
-
Avecia Biotechnology
F
acility and

many smaller (<£10m
) but

important investments like that of Banner Chemicals.


NEPIC’s strength has come from driving a strong public and private partnership with 70% of its members
being SMEs working in partnership with large global conglomera
tes and academia. The cluster has not only
helped to regenerate this key manufacturing industry in our economy, but is the only industry body that has
continuously worked to raise the international profile of this important UK manufacturing and research
s
ector. This is clearly demonstrated by the collaborative agreements NEPIC has with other cluster
organisations in India, Brazil and across Europe. In fact through this international work NEPIC is regarded
as a leading cluster organisation across the world.

Those working for NEPIC have become ambassadors for
our country helping others to set up activities whilst enabling the UK to be recognised as a key player in
these vitally important industries.


NEPIC has two motives for this strategically important
international work, firstly, in an increasingly globalised
industry, to increase the trade opportunities of our members and also to help identify new inward investment
opportunities. We have been doing this work at a time when, incredibly, this sector has
not been a priority
for BIS UK Trade and Investment team.


The process sector that is, Chemicals, Polymers, Pharmaceuticals and Biotechnology is a leading edge
research based manufacturing industry, and is the last remaining net export sector in the whole
UK
economy, yet for reasons that are not clear, it is not regarded as a priority sector for support by UKTI. It is
through NEPIC’s work that this vital UK manufacturing sector is still just about alive on the international
stage, despite the fact that it i
s this sector that underpins all other manufacturing sectors in the UK
economy. In the UK it is a £69 billion industry which, for every day over the past decade has added £20m
the UK balance of trade while other manufacturing sectors have shown a £200m def
icit. Six hundred
thousand (600,000) UK jobs depend on this sector with pay levels that are 20% higher than other
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manufacturing sectors. Chemicals & Pharmaceuticals represent 12% of total manufacturing, twice that of
aerospace and with £92,000 of GVA per e
mployee adding 25% more value than aerospace. We are the
heart of the UK economy but have remained the neglected wealth generator for many years.


The £0.5m per annum of grant funding received by NEPIC over the last 7 years has been leveraged by the
chem
ical, pharmaceutical, polymer and biotechnology companies to the tune of £25m by both in kind and
cash contributions towards its activities. Membership has grown to 550 since 2004. In kind contribution from
members to the work of NEPIC now exceeds £2.5m in

addition to their cash contributions and other
services they purchase from the cluster. This makes the NEPIC activity look like a £5m business.
Furthermore we were instrumental in creating the NEPIC 10 Point Plan for Teesside Industry which led
directly t
o the £60m Tees Valley Industrial Programme TVIP (50% funded by BIS). We were able to rapidly
develop this programme in response to the recession because the cluster is extremely responsive to
industry needs because of its strategic thrust teams which are

given direction from more than 120 senior
industry executives. Through all of this industry led work NEPIC has been credited with generating £600m
per annum of Gross Value Add (GVA) for the UK economy which is a huge return on investment for the
public se
ctor investment made.


Key focus areas for the NEPIC cluster include networking, enabling necessary linkages support and
knowledge sharing. Marketing and promotion, providing a voice for industry and UK sector leadership to
Government. In the area of stak
eholder advice and linkage, it was through NEPIC’s involvement and work
on skills and education that resulted in the formation of the National Skills Academy for the Process
Industry.


About Humber Chemical Focus (HCF) and Humber Cluster

HCF is a 100 m
ember, business led, public
-
private sector partnership established in 1999 to support the
growth and development of the Humber’s chemical economy. The partnership hosts over 10 industry
focussed networks embracing aspects of productivity, skills, regulator
y issues as well as sector specific
groups on bio
-
fuels and renewable energies. HCF over the last decade has been one of the champions of
the chemical sector & supply chain

and, increasingly, the newly arriving renewables sector embracing the
energy and pr
ocess industries. Historically the sector has grown a substantial business presence and has a
truly global and international outlook.


Key Cluster Facts and Economic Scale

Humber is home to major international chemical and process sector groups e.g. Air Products, ABP, BOC,
BP, BASF, Blue
-
star, ConocoPhillips, Centrica, Cray Valley, Croda, Greenegy, Ineos, Jotun, Kimberley
Clark, KTN, Nippon Ghosei, Simon Storage, Synthomer,
Scottish & Southern Energy, Total.


The Humber’s chemical and supply chains operate at both global scale and global reach. As sector
delivering a £6 billion output contribution with average chemical GVA/employee contributions in excess of
£100,000 and, in

particular, an area that is:


Hosting over £1.4 billion of investments announced in new process, energy and infrastructure projects in the
last 7 years.


Home to Europe’s largest Acetyl manufacturing facility at Saltend Hull


Host to Croda plc the UK’s l
argest (£1 billion t/o) and most successful downstream consumer chemicals
group.


Home to UK's largest petrochemical refining facilities manufacturing 25% of the countries liquid transport
fuels


Host to the UK largest concentration of power generators

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Host to UK largest Ports & Logistics hub handling alone over 50 million tonnes of key feedstocks such as oil,
gas coal, bio
-
mass and other chemical and

bulk agricultural products.


Home to UK’s largest investment programme in the development of clean/bio
-
f
uels technology and
manufacturing.


Host destination to the UK’s first major scale carbon capture pilot technology development.


Case Study on Supporting Economic Growth
-
CATCH

The idea of CATCH (Centre for the Assessment of Technical Competency Humber)

was first established in
the late 90’s when the industry cluster group the Humber collectively and collaboratively recognized a
training gap. Part of this gap arose from the need to attract new entrants to replace a skilled but ageing local
workforce as w
ell as provided a training environment which much more closely mirrored a real operating
chemical environment.



Led by the Humber’s chemical cluster organisation, HCF (see above), a local partnership was established
between the local chemical industry and

the local authorities, led by North East Lincolnshire Council, to
develop the CATCH concept further and seek public and private sector funding to build and establish the
centre.


In 2005 this collaboration and partnership delivered a successful funding p
ackage of over £8 million to
establish the new CATCH facility at Stillingborough in North East Lincs and at one of the hubs of the regions
chemical sector. Since April 2006 the facility has seen over 380 apprentices complete a year’s training
provided by l
ocal training providers in a close to real work environmental. In addition the adjacent office and
training centre has received over 30,000 visitors and combines with the operating site to be a beacon to the
overall quality of provision in to Humber.


It i
s acknowledged that the CATCH concept and final site would not have happened without the presence of
a local chemical cluster, led by HCF and through active and highly committed partnership working where the
business and investment risks where shared.
The
CATCH facility is now on it third ex
pansion plan reflecting
the
success and the quality of the cluster partnership that under pins this local innovative enterprising
approach to local training that matches industry needs.


About Yorkshire Chemical F
ocus (YCF)


Formed in 2005, YCF works in partnership with over 100 local chemical member companies from across the
industry, to encourage growth, increase competitiveness and help sustainability within the sector.


The region is host to 250+ chemical and
chemical using companies which contribute £2.2 billion in direct
sales, adds £570million in GVA and employs over 11,000 skilled workers.

Of these sales, by the chemical sector in Yorkshire, over 50% is for export.


Of the 250+ companies in the region 80%
are SME’s (55% of these have less than 10 employees) and with
14% of all new chemical businesses based in Yorkshire it is not a surprise that Sheffield, Leeds and York
have been identified by the Royal Society of Chemistry as the UK’s major clusters of che
mical science spin
-
outs.


The Yorkshire chemical industry not only manufactures finished products but also makes products that end
up in a wide range of other products and end uses. Some examples are:




Cosmetics and toiletries



Cleaning Products



Paint

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Agricultural products



Lubricants



Plastic


containers, bottles, doors etc



Paper production



Adhesives and sealants



Water treatment



Pharmaceutical ingredients



Textile production


In addition to the chemical producers and users within the region, YCF also hos
ts the Personal Care
Programme, which is a regional partnership programme which represents and supports more than 100
companies and institutions actively involved in Personal Care located in Yorkshire & the Humber.

The members are involved in all aspects
of the Personal Care sector and range from large multi
-
nationals to
small companies active in skin care, hair care and toiletries.


The industry is also backed with a strong local academic base with capabilities including:




Particle and colloid science



N
anotechnology



Formulation



Skin and hair biology



Renewable and sustainable technologies



Colour chemistry



Packaging and desig
n

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