The North-east is the most reliant region in England on the public purse.
Around 56 per cent of its economy comes from the public sector, according to figures from the Office for National Statistics (ONS).
An average of £9,588 is spent on every person living in the region by the government, the highest in England outside of London and 12 per cent higher than the national average of £8,559 (see box).
Without this public sector funding the North-east’s economy would more than half.
The situation is acutely evident in the metropolitan county of Tyne & Wear, the region’s most populated area.
Figures from Glenigan show that of the 30 largest projects with contracts up for grabs, which are worth a total of £4.9 billion, 19 have public sector clients.
Ten of the contracts in the county have involvement from one of the five councils – Newcastle, Gateshead, Sunderland, North Tyneside and South Tyneside.
The largest contract in the region combines the interests of Newcastle and North Tyneside Councils - the £1.1bn regeneration of the North bank of Tyne.
The regeneration of the North Bank of the Tyne focuses on a 10 kilometre stretch from Walker riverside to the Smiths Dock in North Shields.
The area has been affected by the demise of shipbuilding and particularly the closure of the Swan Hunter shipyard in 2006.
Most of the major projects in Tyne and Wear are regeneration schemes with the aim of transforming former industrial areas into modern mixed use developments.
Regeneration company Sunderland ARC is involved in four of the top 30 projects worth a total of £793 million.
Stuart Ainsley is project manager at Sunniside Partnership, a division of Sunderland ARC charged with attracting£265m of private and public investment to the Sunniside area of Sunderland between now and 2018.
He says there are four things that contractors can do to increase their chances of winning work on Wearside.
The first is to visit the site of a potential project and meet the team within the tender period if there is an opportunity to do so.
The second is to make sure contractors stress in all correspondence with the client what it is that differentiates their service from competitors.
Mr Ainsley adds that it is preferable for contractors to have a local office in the North-east employing local people and offering training schemes or apprenticeships for local people.
For his final piece of advice he says: “Contractors should always read tender documents carefully and provide thought out, site specific answers to the questions asked.
“Make sure the key personnel involved in the preparation of bids understand the key processes for public sector contracts. It is a good idea to hold workshops or training specifically for this process.”
He adds: “It is good practice to provide material and responses that are site and project specific instead of lots of generic information. Include good examples of projects that are similar to that tendered.”
As simple as it sounds, Mr Ainsley says it is also crucial to provide everything asked for in tender documents such as insurance certificates.
He also believes it is good practice to provide good CVs of the team that would be working on the project on a day to day basis with the client, not just the very senior staff.
Tyne and Wear’s heavy reliance on the public sector to fund new projects could be good news for contractors from outside the region who have no prior experience working in the area, as there should be less local favouritism.
The European Union’s public procurement directives state that any organisation in Europe which has public funding to spend must open up their procurement process to the European market.
This means that for the majority of projects in Tyne & Wear there can be no bias towards local firms, with everybody treated on a level playing field.
But the public sector is not alone in driving change in the county with Gateshead’s town centre set for a major transformation at the hands of Tesco’s development arm Spenhill.
Demolition has begun on the Trinity Square car park (pictured) which was made famous in the film Get Carter.
A development agreement was signed between Spenhill and Gateshead Council in July, which included the agreement to demolish the famous multi-storey car park that currently dominates the town centre.
The £150m proposals to replace Trinity Square include a new town square, 45 retail units, offices, a student village with over 900 beds, town centre parking and a Tesco Extra store as well as the potential for a hotel.
One North East to be axed
Regional development agency One North East will cease to exist from April 2011 under new plans from the coalition government.
One North East is involved in five of the top 30 projects coming through in Tyne & Wear worth a total of £1.4 billion, as well as having a stake in many more projects throughout the North-east.
But One North East’s days are numbered after the coalition government announced in the June 2010 Budget that it will scrap Regional Development Agencies so that from April next year it can claw back the RDAs’ annual £2.3bn budget.
Labour, which established RDAs in 1999, claims One North East has been a success, having created or protected 160,000 jobs as well as recently playing a key role in persuading Nissan to manufacture its new electric car, Leaf, on Wearside.
There are concerns that there will be big economic problems in the region once One North East is scrapped as it is the most reliant in England on public sector funds.
But the coalition government claims One North East and other RDAs have been wasteful, with Prime Minister David Cameron citing the example of One North East having overseas offices in China, Japan, South Korea and Australia as inefficient spending.
The government is instead establishing a £1bn regional growth fund which will be administered by the Department for Business, Innovation and Skills.
The new £1bn pot of cash will be made available from 2011-12 and will be administered by new Local Enterprise Partnerships, panels of local businesses and councils that will work together to develop capital projects for the local economy.
The government has stressed the fund will be used to support capital projects in areas of the country where economies are dependent on the public sector.
Vision for Tyneside’s future
On the 16 June 2010, Newcastle and Gateshead city development company 1NG launched a 20 year economic and spatial masterplan for the two areas called 1Plan.
The 1Plan looks at the economy, people and place and sets out a vision for the future to improve Newcastle and Gateshead’s competitiveness.
It has been put together with the support of Gateshead Council, Newcastle City Council, One North East and the Homes and Communities Agency.
The 1Plan vision is set around a four point action plan:
- Creating a knowledge based economy through attracting scientific and medical businesses to a new Science City on the site of the old Scottish and Newcastle brewery in Gallowgate, Newcastle.
- Building skills and talent by encouraging training providers to help school children to learn the skills they need to work over the next 20 years.
- Transforming the urban core through encouraging retail, leisure and other development to move from out of town business parks to the centre. The riverside will be used to attract offshore, subsea and environmental industries.
- Pioneering a sustainable city through investing in public transport and infrastructure, encouraging renewable energy generation and setting high energy efficiency standards for new buildings.
To find out more about the opportunities 1Plan might present over the next two decades visit www.newcastlegateshead.com/1NG/