THE EXECUTIVE

                                6th October 2008


                 PROGRAMME FOR ENGLAND
                      PROJECTS FUND

1.       SYNOPSIS

         This report explains negotiations with the Regional Development
         Agency One NorthEast (ONE) regarding the arrangements for
         Northumberland to benefit from the Rural Development Programme for
         England (RDPE). It explains the roles to be undertaken by the
         Northumberland Strategic Partnership (NSP) and Northumberland
         County Council (NCC) on behalf of ONE. These entail:
             NCC acting as Accountable Body for the RDPE Programme.
             NSP undertaking the management role for RDPE within
               Northumberland. This includes acting as programme manager
               for the New LEADER programme and managing the Market
               Towns Visitor welcome scheme.
             NCC Regeneration Staff operating schemes to support rural
               businesses (Farm Diversification Scheme and Rural Property
               Projects Fund)

         The report also explains proposals for NCC to manage a Single
         Programme funded Small Projects Fund to provide property
         investments grants in the ONE priority areas of Berwick, Blyth Valley
         and Wansbeck.

         It seeks the Executive’s approval to the confirmation of the proposed
         arrangements, including the management of funds.


         Policy:                        The objectives of the RDPE for the
                                        Region      have    been    developed
                                        specifically to fit with the Regional
                                        Economic and Spatial Strategies.

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                                They are closely linked to the Rural
                                Development         Strategy       for
                                Northumberland,     the    Sustainable
                                Communities Strategy and the County
                                Council’s own Strategic Statement.

         Financial:             The County Council will act as
                                Accountable Body for the £4.35m of
                                RDPE funds for Northumberland
                                between October 2008 and March
                                2011. In order to minimise the risk to
                                the Authority in undertaking the role,
                                programme             operational       and
                                management arrangements will be
                                developed in accordance with strict
                                Responsibility for the allocation of the
                                £1.5m Single Programme Small
                                Projects Fund will be with the County
                                Council. Management procedures will
                                replicate     previous       arrangements,
                                which have avoided any actual
                                financial liability to the council. External
                                Funds have been secured to cover the
                                operational and management costs of
                                the scheme.

         Personnel:             ONE have seconded a member of staff
                                into NSP to assist with the workload
                                associated with LEADER. They have
                                agreed the funding for the continued
                                employment of existing staff to operate
                                the Single Programme Small Project
                                Fund      and    RDPE         Business
                                Accommodation Fund.

         Property:              There are no implications for County
                                Council property.

         Health & Safety:       All staff employed on the operation and
                                management of the schemes will be
                                covered by NCC Health & Safety
                                policy. Grant recipients will be required
                                to adhere to national legislation during
                                the delivery of projects.

         Crime and Disorder:    The RDPE aims to secure sustainable
                                rural communities which includes
                                measures to increase community
                                involvement in management and,

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                                         where possible, tackle local issues,
                                         including security.

         Equalities:                     The RDPE seeks to tackle the issues
                                         of rural residents, including the
                                         provision of access to sustainable
                                         services, employment, enhanced skills
                                         and training, together with greater
                                         community involvement.

         Customer Considerations:        £2.1m of the RDPE is to be delivered
                                         through the LEADER approach. This
                                         has involved Local Action Groups
                                         drawing up strategies and plans
                                         relevant to local needs. The Small
                                         Project Fund will take account of
                                         appraisals of previous schemes and
                                         their recommendations on ways to
                                         make them more responsive to
                                         customer requirements.


         The proposals are being submitted to the Risk Appraisal Panel meeting
         on 26 September and the outcome will be reported to the Executive

          There is the risk that failure to manage the RDPE locally will lead to
         remote administration which is likely to be less responsive to the needs
         of local communities. It could lead to the loss of/reduction in funds
         available for Northumberland.

         Negotiations have sought to minimise financial risk to the Council and,
         in so doing, have applied the experience of both NSP in programme
         management and the Council’s regeneration based Property
         Development Team in managing previous schemes, including the
         current LEGI Small Project Fund.

         Acting Director of the NSP
         Assistant Director of Finance
         Head of Legal Services
         Executive Member for Regeneration – Cllr J Smith

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         The Executive is asked to endorse the approach being taken to
         secure funding for Northumberland through the RDPE.

         Subject to there being an acceptable level of financial
         implications/risk to the County Council, it is recommended to
         agree that:

  1. The County Council act as Accountable Body for the £4.35m RDPE
     Programme from October 2008 – March 2011

  2. NSP undertake the management role for RDPE including a
     programme management role for the LEADER programme.

  3. Negotiations should      continue regarding the operational
     requirements for a farm diversification scheme and rural property
     project fund, and that, if appropriate, the Council agree to
     undertake the operation and management of the schemes; and

  4. Subject to para. 3 above, the Council’s Regeneration Division
     Property Development Team manages the farm diversification and
     Rural Property Projects Fund in association with the proposed
     similar fund for businesses in Berwick, Blyth Valley and Wansbeck.


         The RDPE 2007-2013 is jointly funded by Defra and the European
         Union, with the aim of delivering targeted support to rural businesses
         and communities. It is to be managed in the region by ONE, Natural
         England and the Forestry Commission.

         The RDPE investment, to be managed by ONE, combines larger
         regional projects to help growing businesses in different sectors of the
         rural economy and projects to add value to agricultural and forestry
         products with smaller investments to help businesses to start up, grow
         or diversify.

         It also includes an investment programme to help rural communities to
         take an active role in local economies through an approach based on
         the previous community based LEADER and LEADER Plus
         programmes. Through this approach, Local Action Groups (LAGs)
         have produce strategies and action plans to deliver community
         benefits. ONE has agreed the establishment of three LAGs, covering
         most of rural Northumberland, the Uplands, the Coast and Lowlands,
         and a North Pennines LAG for parts of Northumberland and Durham.

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         Proposed Arrangements
         ONE has invited the NSP to manage the Northumberland RDPE
         programme of £4.35m from October 2008 to March 2011. It is being
         asked to oversee delivery and grant administration mechanisms for
         four separate elements of the RDPE with NCC acting as the
         Accountable Body. This is consistent with the programme management
         role NSP undertakes on behalf of ONE as a Sub Regional Partnership
         and has been endorsed by their Board and Executive.

         European funding regulations require the Accountable Body to settle
         grant claims submitted by projects prior to it being able to draw down
         the funding from ONE. This will in effect require the Council to bank roll
         the RDPE programme. It is estimated that the average financial
         exposure will be £145,000 for a period of 30 days.

         The grant management arrangements will minimise any risk to the
         Accountable Body by ensuring that:

                  Grant applications are subject to a rigorous assessment to
                   ensure eligibility with funding criteria
                  Clear conditional grant offers are in place which pass on any
                   grant conditions imposed on the Accountable Body to the grant
                  Project grant claims are supported by the required
                   documentation to comply with for European audit requirements
                   prior to their approval and payment.

         RDPE Schemes within Northumberland

         1. The LEADER approach and management through the LAGs
         £2.1m of resource is being made available to support the delivery via
         the LEADER approach from October 08 to March 2011. NSP’s
         involvement is intended to ensure consistency of approach; effective
         links between the action groups for joint projects and experience
         sharing; links between local strategies and action plans and other wider
         strategies and plans; and the effective operation of management
         mechanisms for which it has a proven track record. To ensure a
         “bottom up approach” the operational arrangements will involve LAG’s
         making the ultimate project approval decisions. However prior to any
         decision ONE and NSP will have undertaken a rigorous assessment of
         the project to ensure it conforms with all eligibility criteria, thus
         minimising the risk of any potential clawback at a later date.

         NSP will be responsible for the assessment and payment of project
         grant claims, a role which it has undertaken since 1999 with no
         financial implications for the Accountable Body. NSP will ensure that
         project claims are supported by the required documentation to comply
         with for European audit requirements prior to their approval and

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          ONE have seconded a member of staff within NSP to help with local
         management of LEADER. In addition to this NSP will receive additional
         resources to enable it to undertake the “programme management”
         functions which have been devised to minimise risk to the Accountable

         2. Support for Tourism within Market Towns

         £750k of RDPE Funds will be made available to support tourism
         initiatives included within the Market Towns Welcome Plans. This will
         complement capital funds which are to be made available through
         ONE’s Single Programme. The funds will be administered by NSP
         through the existing Market Towns Framework.

         3. Rural Property Project Fund
         £1.5m is available between this and the Farm Diversification scheme to
         provide grant aid for businesses to provide new workspace by the
         conversion and/or re-use of existing premises or new small scale

         The project will be operated on a similar basis and use existing
         experience to previous schemes run by the Council’s Property
         Development Team in the Regeneration Division: The Redundant
         Building Grant Scheme, Small Projects Fund and the Small Projects
         Fund for the Wansbeck LEGI.

              4. Farm Diversification Scheme
              Funding is available to support agricultural diversification to
              encourage and assist land based businesses to diversify into other
              business activities. Precise arrangements for the management of
              the Farm Diversification scheme have still to be agreed but they are
              likely to be in association with Business Link North East in order to
              comply with the Government’s Business Support Simplification
              Programme. There are proposals for the Council’s Property and
              Business Development Teams to deliver the scheme. These will be
              subject to minimising the financial implications for the County
              Council through an approach similar to that for the other RDPE
              schemes detailed in the report.

         Single Programme Private Sector Small Projects Fund

         Whilst discussion of the RDPE arrangements has been continuing, a
         further £1.495m Small Projects Fund, using the ONE Single
         Programme, has also been negotiated to include ONE priority areas in
         Berwick, Blyth Valley and Wansbeck. The scheme will complement
         RDPE proposals and the Wansbeck LEGI scheme to help secure
         support across the County, excluding Cramlington.       Under the

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          proposed arrangements, risks to the Council will be removed by all
          funds at a project level being drawn down from ONE when
          commitments are formalised with successful applicants. Liability for
          potential “clawback” will be placed with grant recipients.      The
          arrangements also include funds for the Property Development Team
          for the life of this and the rural fund.

7.        CONCLUSION

          The RDPE is a significant source of assistance for rural businesses
          and communities. NSP management can help to ensure its effective
          promotion and delivery against local needs and assist communities to
          maximise the benefits of the LEADER approach across the rural

          The delivery of a Private Sector Small Projects Fund provides an
          opportunity for other areas to benefit from help with smaller projects
          which do not attract larger scale gap funding.

          The negotiations of arrangements to deliver those projects has used
          experience with previous and current initiatives to minimise the
          financial risks to the Council whilst securing £5.85m in grant aid for
          Northumberland without the need for the Authorities own funds to act
          as match funding to draw down the grant.

              Not applicable to this report.


          This report has been prepared by:
          John Hamilton, Economic Development Officer. (533917)
           Heather Smith, NSP Head of Programmes (500642)

          For further information please contact either Heather (up to 24th
          September) or John thereafter.

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