£100m boost for urban regeneration in England’s Northwest
- Approved, capitalised and ready for investments in April 2010
- Expected to create over 7,000 new jobs
- The first JESSICA Holding Fund in England, outside London
- New fund to be known as the Northwest Urban Investment Fund
The Northwest Regional Development Agency (NWDA), European Regional Development Fund (ERDF) and the European Investment Bank (EIB) have agreed to launch a new £100m fund to finance urban development projects across the Northwest of England. These are expected to create over 7,000 jobs.
Steven Broomhead, Chief Executive of the NWDA, said: “This initiative is an opportunity for the region to put a mechanism in place that will ensure we can prolong the benefit of our ERDF Programme. The Northwest Urban Investment Fund will allow us to invest in revolving funding, in addition to the normal single use grants. This investment will be in the form of equity, loan or guarantee. The returns from these investments can be re-used on other projects again, and again, extending the life of our European funding and helping us to maintain a level of physical regeneration during the challenging economic climate.”
Paweł Samecki, European Commissioner for Regional Policy, said: "I am delighted that the Northwest Urban Investment Fund is being launched today. The European Regional Development Fund will grant £50 million to the Northwest Urban Investment Fund to boost regeneration and long-term economic development. The Fund is part of our 'JESSICA' (Joint European Support for Sustainable Investment in City Areas) initiative and will provide the Northwest with a revolving source of investment that pays for itself. When loans are re-paid, the fund is re-cycled and then re-invested. This means the money goes much further than a one-off grant and will continue to enhance the competitiveness of the regional economy for years to come. I congratulate everyone involved in this innovative scheme."
Simon Brooks, European Investment Bank Vice President responsible for the United Kingdom, said: “This collaboration between the EIB and the Northwest Regional Development Agency builds on the EIB’s reinforced commitment to support SME activities and sustainable urban regeneration in the current financial and economic crisis. We intend to use EIB financial resources to their full advantage, and where appropriate, to complement the investment of European Structural Funds in the region.”
The Joint European Support for Sustainable Investment in City Areas (JESSICA) initiative will be branded as the Northwest Urban Investment Fund from 2010. Set up by the NWDA with funding from the ERDF programme this new fund has been made possible with the cooperation and support of the European Investment Bank (EIB).
The £100m fund includes £50m from the ERDF and the equivalent of £50m from the NWDA and will be managed by the EIB. The EIB will be able to add to this holding fund in the future.
Following today’s agreement between the EIB and the NWDA, the Northwest Urban Investment Fund will be operational and ready to invest in Northwest projects from spring 2010.
With the current challenging economic conditions it can be difficult for urban projects to secure finance from traditional commercial sources. This fund will provide debt, equity and guarantee investment to support projects that will help unlock and regenerate sustainable development in the Northwest’s urban areas and make a difference to our towns and cities. By providing funding support in this way, the public sector will be able to obtain a return from the investment and reinvest the returns in future projects, thereby creating a sustainable revolving investment fund.
JESSICA will enable the NWDA to draw down matched ERDF funding into a bank account, rather than for a specific project. This allows the EIB to manage a fund that fits the objectives of the ERDF Programme and the NWDA and pro-longs the life of ERDF funding whilst also extending the range of finance available to projects in the Northwest.
The Northwest is the second English region to set up a JESSICA Holding Fund, following a similar agreement between the EIB and the London Development Agency in October this year.
The NWDA and EIB signed a Memorandum of Understanding (MoU) in February 2009. The MoU which establishes this agreement was signed in Warrington by Simon Brooks, EIB Vice-President, and Steven Broomhead, Chief Executive of the NWDA.
JESSICA - Joint European Support for Sustainable Investment in City Areas – is one of the Cohesion Policy Joint Initiatives that were developed by the European Commission to contribute to making EU Cohesion Policy more efficient and sustainable. The JESSICA mechanism is based on cooperation established between the Commission, the EIB and the Council of Europe Development Bank and supports investment in sustainable urban development and regeneration.
This initiative, designed to increase the use of financial engineering instruments, allows Managing Authorities to use some of their European Structural Funds allocations to invest in revolving funds - rather than once-off grant financing. By doing so the Authorities can recycle financial resources in order to enhance and accelerate investment in urban areas. These investments, which may take the form of equity, loans and/or guarantees, are delivered to projects via Urban Development Funds and, if required, holding funds.
The Cohesion Policy Joint Initiatives originate from partnerships established between the European Commission, the European Investment Bank Group and other international financial institutions. The four Joint Initiatives developed by the Commission in the context of the Cohesion policy are:
JASPERS – Joint Assistance to support Projects in European Regions (EIB, European Bank for Reconstruction and Development and KfW Bankengruppe);
JEREMIE - Joint European Resources for Micro to Medium Enterprises initiative (EIF);
JESSICA - Joint European Support for Sustainable Investment in City Areas (EIB and Council of Europe Development Bank)
JASMINE - Joint Action to Support Micro-Finance Institutions in Europe (EIB Group)
The European Investment Bank is the European Union’s long-term financing institution and, provides long-term finance for capital projects promoting European economic objectives. The EIB made its first loan in the UK in 1973 and since then has lent around €75bn for investment in the UK economy. In the years from 2004 to 2009, the EIB financed investment in the UK totalling some € 23.5bn - GBP 17.5 billion.
In 2009 the EIB has already lent about € 4.6bn (over GBP 4 bn) for UK projects ranging from investment helping UK regional development, to protecting the environment, promoting clean and secure energy sources, improving education facilities, promoting the development of national and regional transport, and supporting the activities of small and medium sized enterprises. Financing in the UK accounted for over 8% of the EIB’s overall EU lending so far in 2009.
EIB Activity in the North West
Over the last ten years (1999-2008), the EIB has lent some GBP 2.5 billion for capital investment to encourage development in the North West of the UK. This has included projects such as support for research and development into glass processing technology, construction of a chipboard factory, design development and manufacture of vehicles, modernisation of a bus fleet, research and development investment in some of the region's universities, modernisation of hospitals, construction and refurbishment of social housing, extension and renovation of electricity supplies, and water and waste-water improvement schemes.
In 2008, the Bank lent some EUR 3.8 billion (GBP 3.6 billion) for projects in the UK, ranging from investment helping the UK's regions, to protecting the environment and improving national health facilities, transport, and supporting the activities of small and medium sized enterprises. Financing in the UK accounted for over 7% of the EIB’s overall lending in the EU in 2008.
The Northwest Regional Development Agency (NWDA) works to deliver economic success in England’s Northwest by building the competitiveness of its businesses, people and places. Utilising our technical expertise and strategic influence, we help the region’s 250,000+ businesses to develop and grow, as well as supporting international trade and encouraging inward investment.