Humber Industrial Strategy Prospectus June 2019

Humber Industrial Strategy Prospectus

Contents

Executive summary ...... 3 Foreword ...... 7 About the Humber ...... 8 Our framework ...... 14 Accelerating clean growth on the Energy Estuary ...... 16 Developing the Humber ports and manufacturing clusters ...... 27 Developing our approach to other strategic sectors ...... 35 The five foundations of productivity ...... 37 Evidence base ...... 46 Consultation ...... 47

Cover photo: Ørsted

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Executive summary

Introduction The Humber economic system is highly interconnected, both internally and with the wider Northern Powerhouse and Europe, with several distinctive assets which play an important role for UK Plc. As a major energy and chemicals producer, international gateway and manufacturing economy, a significant part of the UK economy depends in some way on what happens in the Humber.

The Humber is the Energy Estuary, contributing to over a quarter of the UK’s energy, and is at the forefront of developing the UK’s world-leading offshore wind sector. We are home to two of the UK’s six oil refineries, its second largest chemicals and process cluster and one of two integrated steelworks, all of which are vital to the UK and beyond.

The Humber has a diverse mix of industrial, urban, rural and coastal areas. Since the tolls on the Humber Bridge were reduced in 2012, the Humber economy has started to become more integrated. There were 9.8 million trips across the Bridge in 2017/18, 52% more than in 2012.

The Humber economy is growing: working age unemployment fell from 10.6% to 5.5% between 2012 and 2018, with 23,000 fewer people out of work. The Humber has 3,765 more businesses than in 2012, with an economy that is 12.2% (nearly £2.1bn) bigger.

Despite this, the Humber is still home to some of the most deprived wards in the country. There is significant potential for further growth, but some existing major industries like steel are vulnerable. The Humber emits more carbon dioxide than anywhere else in the UK – 30% more than the next largest industrial cluster – whilst being one of the areas most exposed to climate change. To continue its progress, the Humber needs to strengthen the competitiveness of its existing economy as well as look to new opportunities. Accelerating clean growth on the Energy Estuary

Decarbonising the Humber Our ambition is to develop the Humber into a net-zero carbon industrial economy by 2040, protecting strategically-important industries and maximising benefits for local communities and businesses.

To achieve this we will need to:

• Commit to a whole-place approach to decarbonisation, tackling the issue across our economy and society. • Continue to develop as a global centre for clean energy generation. • Remain a home for energy-intensive industries, whilst significantly reducing emissions. • Transition transport to electric and hydrogen fuel. • Deliver higher energy efficiency standards for residential, commercial and industrial buildings. • Transition building heat in urban and rural areas to low carbon sources. • Become a testbed for new technologies, processes and business and regulatory models. • Be the first region to deploy carbon capture, utilisation and storage at scale.

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• Maximise the contribution of our natural capital. • Maximise local business and community benefits. • Develop a joint public/private team to deliver the transition.

Clean energy generation Our ambition is for the Humber Energy Estuary to be a global leader in clean energy generation. This includes supporting the offshore wind sector to scale up as it seeks to deliver 30GW of capacity by 2030, much of it in the North Sea, and continuing to contribute to other parts of the energy mix, including biomass, solar, energy from waste and biofuels.

To achieve this we will need to:

• Provide appropriate land and port facilities. • Collaborate with other areas and Government to scale up the offshore wind sector. • Stimulate local supply chain development. • Support the sector to intensify innovation. • Be the national centre of excellence for offshore wind skills. • Prepare for wind turbine decommissioning and repowering work in the medium-term, developing a circular economy. • Embed clean energy in the local energy system and wider economy. • Innovate with battery storage and alternative energy vectors like hydrogen and ammonia, crucial to the development of a low carbon economy.

Energy intensive and continuous process industries Our ambition is to improve the long-term competitiveness of the Humber’s energy-intensive and continuous process industries cluster, supporting it to decarbonise and expand by pursuing complementary opportunities. This means supporting sectors that are strategically important to the UK, like steel, chemicals and oil refining, and exploring the potential for diversification and industrial symbiosis.

To achieve this we will need to:

• Support the Humber cluster to decarbonise. • Develop industry leadership. • Support collaboration to pursue new business opportunities and increase efficiency. • Re-use and re-purpose legacy industrial assets to deliver clean growth. • Champion the use of British-made products with more longer-term certainty. • Support the commercialisation of new ideas and the growth of existing SMEs. • Address recruitment issues through investment in technical and management skills, and raising awareness of career opportunities. • Overcome barriers to taking forward innovations. Developing the Humber ports and manufacturing clusters

Ports and logistics Our ambition is to create a globally competitive hub for sustainable shipping, energy and logistics by investing in the assets and capabilities of the Humber ports, intensifying and diversifying their economic role, and strengthening their already pivotal contribution to the Northern Powerhouse and wider UK economy.

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To achieve this we will need to:

• Address the remaining transport bottlenecks that are holding back the growth of the Humber ports. • Deliver the infrastructure which is required to maximise the impact of the Humber ports and increase their contribution to the Humber and UK economies. • Capitalise on new technologies to ensure the Humber ports remain at the leading edge of innovation within the sector. • Prepare the workforce for the ports and logistics sector of the future, ensuring alignment with other skills activity being taken forward across the Humber. • Create a business environment which supports intensification and diversification of activity around the ports. • Develop the ‘Humber Maritime Supercluster’ collaborative partnership amongst the key businesses and stakeholders within the Humber.

Engineering and assembly Our ambition is to grow and improve the competitiveness of the Humber’s engineering and assembly sectors, supporting them to adapt to industry trends and leveraging the Humber ports to attract new and expanded manufacturing operations.

This includes building on existing specialisms, like caravans, modular building and furniture, pursuing new opportunities like train assembly, and strengthening local supply chains.

To achieve this we will need to:

• Support businesses to integrate new technology into their products and processes. • Ensure there is an adequate supply of sites and premises. • Stimulate demand for modular building. • Work with businesses to respond to their changing skills requirements. • Prepare more businesses to scale up to access new supply chain opportunities. Developing our approach We have also begun to update our approach to the cross-cutting issues that affect the whole of our economy, the five foundations of productivity. This includes:

Ideas Developing the Humber’s innovation cluster, with a focus on the specialist areas of health, energy and low carbon, environment and water management, logistics and the digitalisation of manufacturing.

People Building the Humber’s skills profile to meet the changing needs of employers, raising awareness of career opportunities and supporting people to realise their potential and progress in work.

Infrastructure We have commissioned an external review of the Humber’s short-, medium- and long-term infrastructure requirements which will inform our approach. This will include a more ambitious long- term approach to transport in the region and connectivity with other regions that will enable the Humber’s growth to be sustained; continuing to invest in mitigating flood risk but also becoming more resilient to flooding; and maximising our advantages from digital connectivity.

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Business environment Making the Humber internationally-competitive in more sectors, joining up public and private business support and supporting businesses to challenge themselves. We have commissioned an external review of supply chain development opportunities.

Places Supporting places to diversify and adapt for the future, enabling every part of the Humber to play to its strengths, whilst improving connectivity between places to ensure that everyone has the chance to benefit from the Humber’s increased earning power. We will also continue to build on improved perceptions of the Humber as a place to live, work, learn, visit and invest.

We will develop this further through consultation over summer 2019. In the next phase of our work we will also develop our approaches to the food, digital tech and professional services sectors. Consultation We are inviting views and evidence from people, businesses and other organisations across the Humber on our emerging approach. We also plan to start formal engagement with Government on the Humber’s developing priorities, with a view to agreeing our industrial strategy later in 2019.

Details of how to respond are included at the end of this document.

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Foreword

The Humber’s progress over recent years has been encouraging. We have embraced a new industry, offshore wind, and become a leading centre for it. We have welcomed investment from multinational businesses in a diverse range of sectors, expansion from SMEs and seen many more new businesses start up and grow. Our skills levels have improved, unemployment is substantially lower, and our economy has become more integrated – and therefore more competitive – since the tolls on the Humber Bridge were reduced. Regeneration is taking place across our region. The Humber now has a stronger track record of delivery and our reputation is deservedly improved.

However, continuing that momentum will be hard. There is uncertainty in the wider economy, and there are some underlying vulnerabilities in the Humber – as recent events with British Steel have shown. We must ensure our economy continues to adapt to secure its long-term sustainability.

Our proposals are designed to achieve that. This is a bold plan which has been shaped by business, supported by our local authority partners, and I hope it will be well received.

It is a distinctive approach, playing to the Humber’s strengths and looking at where we have the biggest opportunities for growth, but also a realistic one recognising that we cannot be the best at everything. At the heart of it is competitiveness – of individual businesses, places and the Humber as a whole.

The decarbonisation agenda could be transformational for the Humber. We have clean energy, which we can generate a lot more of, an industrial cluster with sectors like steel, oil refining and chemicals that are vital to the UK’s strategic interests, and a geographical advantage. We also have the highest emissions in the country, which will need to be tackled for the UK to meet its international obligations. Bring all that together and we have a big opportunity to become more competitive, attract new investment and create local business and community benefits. It can only be done in collaboration, across sectors and boundaries, and we will need Government to get behind it too.

We have agreed with Government to accelerate the production of our industrial strategy by six months, meaning that it will now be agreed by the end of September 2019 – ahead of most parts of the country. This is an opportunity for the Humber to move ahead, and I hope everyone will get behind it.

As we start our final period of consultation, through to the end of July, I look forward to hearing the thoughts of businesses, individuals and organisations across the Humber on our ideas.

Lord Chris Haskins Chair, Humber LEP

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About the Humber

The Humber economy The Humber economic system is highly interconnected, both internally and with the wider Northern Powerhouse and Europe, with several distinctive assets which play an important role for UK Plc. As a major energy and chemicals producer, international gateway and manufacturing economy, a significant part of the UK economy depends in some way on what happens in the Humber.

The Humber is the Energy Estuary, contributing to over a quarter of the UK’s energy, and is at the forefront of developing the UK’s world-leading offshore wind sector. We have more companies in the offshore renewables sector than anywhere else in the Northern Powerhouse and Scotland, and a growing amount of installed offshore wind capacity off the Humber with significantly more planned for the future.

We are home to important capital-intensive industries, including two of the UK’s six oil refineries, its second largest chemicals and process cluster and one of two integrated steelworks, all of which are vital to the UK and beyond.

The Humber Estuary is at the heart of the region’s economy, hosting the Humber ports and the industrial cluster which spans both banks. The Humber ports are the eastern gateway to the Northern Powerhouse, linking the North and the Midlands to Europe and beyond. With over 40,000 shipping movements each year and 79m tonnes of cargo in the year to end Q3 2018, they are the UK’s largest for both import of raw materials and components and export of UK manufactured products.

Linked to the ports, the Humber has the third highest concentration of engineering and assembly employment in the North, with specialisms including the manufacture of wood products, furniture, fabricated metal products including boilers, and caravans and modular buildings.

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We also have a growing digital tech cluster, with expertise in transforming manufacturing, and specialist professional services linked to the Humber’s role as an international gateway.

The Humber economy is worth £19.37bn in Gross Value Added, 12.2% (nearly £2.1bn) more than in 2012. A quarter of the Humber’s GVA comes from manufacturing – far higher than the national and regional averages.

The Humber has a diverse mix of industrial, urban, rural and coastal areas. Key settlements include the city of Hull and the towns of Beverley, Bridlington, Goole, Grimsby and Scunthorpe.

Since the tolls on the Humber Bridge were reduced in 2012, the Humber economy has started to become more integrated. There were 9.8 million trips across the Bridge in 2017/18, 52% more than in 2012. 92% of these were cars, with analysis showing a large increase in commuting across the river.

The Humber is home to just under one million people and 36,520 businesses – 3,765 more than in 2012. 81.7% of Humber businesses have fewer than ten employees, slightly lower than both the regional (82.3%) and national averages (84.7%).

Between December 2012 and December 2018, the Humber’s working age unemployment rate fell from 10.6% to 5.5% - meaning 23,000 fewer people were out of work. However, the working age population is also shrinking, and the Humber is home to the 3rd and 31st (out of 326) most deprived local authority areas in England.

The Humber accounts for less than 2% of England’s population but 6% of its industrial and commercial energy use. The Humber’s energy intensive industries consume an estimated 8,000GWh of energy, at a cost of around £330million. The Humber also emits 13.8 tonnes of carbon dioxide per person – 9 tonnes higher than the national average. Our track record The Humber is undergoing a dramatic transformation. The Energy Estuary has become a reality with the Humber developing the UK’s leading offshore wind cluster, which is continuing to invest and grow, and several other major energy investments. A diverse range of manufacturing businesses have expanded or decided to base themselves here. An innovative tech cluster has developed around a landmark incubator which is now set to expand. Hull secured and delivered as UK City of Culture, helping to transform the image of the region. Our jobs growth and productivity improvement has outstripped many other places, and our economy has become more integrated and competitive.

Business, council and education leaders have worked together, and with Government, more closely than ever before to enable and deliver this change. The Humber has prioritised its own resources and secured and successfully deployed, in a competitive environment, almost all of the economic development tools available to non-devolved areas – including the largest Enterprise Zone in the country, which now has many sites fully occupied; one of the largest Growth Deals per capita, which has already created and safeguarded over 5,000 jobs; the fastest commitment of European structural funds; one of the first City Deals; and the first Town Deal.

Many substantial projects have been successfully delivered on the ground, including large transport schemes, flood defences, new education buildings and city and town centre regeneration schemes. We have piloted innovative approaches like the Single Conversation to support growth, and joined together with other places across the Northern Powerhouse on common issues.

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The Humber has become a more attractive place to work with and invest in, and through hard work has developed a reputation for strong collaboration and delivery.

Despite all of this, the legacy of the Humber’s past means that it still has many issues to deal with. It also has many new, distinctive opportunities ahead. Opportunities and issues to be dealt with Through analysis and business engagement we have identified significant opportunities for the Humber economy, as well as some issues that need to be dealt with.

Opportunities The Humber can be at the forefront of delivering the offshore wind sector deal. Already home to Siemens Gamesa’s blade factory and Ørsted’s East Coast Hub amongst others, the Humber is the leading cluster close to future North Sea developments. With a third of UK electricity to be generated from offshore wind by 2030, and the industry predicting employment to rise from 7,200 to 27,000, the Humber has further growth potential. In future this could also include decommissioning and repowering turbines, placing the Humber at the heart of an offshore wind circular economy.

The Humber could lead the way in carbon capture and storage. The world’s first bioenergy carbon capture and storage project is being piloted by Drax at its Selby power plant. If scaled up it could become the first “carbon negative” plant in the world and act as an anchor project for CCS in the region. This would support the sustainability and competitiveness of strategically important sectors like steel, petrochemicals and cement where emissions are hardest to reduce, and enable the early development of the hydrogen economy.

The Humber could be a hub for the electric vehicle supply chain. The Phillips 66 Humber Refinery is the UK’s only manufacturer of petroleum graphite coke, used in both electric vehicle batteries and consumer electronics and exported around the world. Phillips 66 is looking to work with the UK government and industry on the development of a UK automotive low-carbon supply chain, potentially located on the Humber bank.

Existing infrastructure is a platform for growth in key sectors. With the abundance of clean electricity being generated by offshore wind farms, existing ethylene and gas pipelines, deep water ports, the fastest broadband in the UK and relatively unconstrained electricity and transport networks, the Humber has many key assets to support growth in its strength sectors. New opportunities are also emerging for industrial symbiosis based around anchor businesses.

Growing the Humber ports can ease national problems and create local benefits. The Humber ports continue to grow on the back of significant investments and have the space for further expansion, relieving pressure on the congested southern ports. However, some improvements to road and rail access will be required to enable future growth.

The Humber can use its ports to capture more value-added activity. The Humber’s port assets, land availability, connectivity and skills base make it well-placed to pursue further opportunities in import customisation, assembly and re-shoring manufacturing – whether with cars through the Grimsby Automotive Terminal, kitchen manufacturers like Wren and Howdens, or Siemens Mobility’s plans to assemble new trains for the London Underground in Goole.

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The Humber has space to grow. This includes the largest Enterprise Zone in the UK covering 1,238 hectares over 50 sites, and many large sites with excellent transport connectivity. However, viability is an issue on some sites because of the abnormal costs involved in delivering the necessary infrastructure.

Our tech sector is helping manufacturers to transform. With an economy strong in manufacturing, the Humber will need to adapt to trends in automation and additive manufacturing. Innovative businesses in our tech sector are specialising in supporting change in manufacturing, and there is scope for further growth.

Our research and innovation specialisms can create new business opportunities. Specialisms at the University of Hull and the globally-significant R&D centres of businesses like RB and Ideal Boilers, covering sectors like healthcare technology, pharmaceuticals, energy and low carbon, environment and water management, and logistics, are a platform for further growth and the creation of higher skilled jobs.

The Humber provides a supportive environment for business growth. Local organisations offer high quality business support, and through the Humber Business Growth Hub they are working together to ensure it is joined up. Recent investors have praised the welcome they have received from the Humber, with experienced local authority inward investment professionals on hand, and the trailblazing Single Conversation providing support on planning and regulatory issues.

The Humber is now a more attractive place to live and invest. Recent flagship business investments and Hull UK City of Culture have changed perceptions of our places, while city and town centre regeneration and new housing developments are supporting an improving Humber proposition.

Leading the energy transition can have wider effects. Investment in industrial and power generation facilities can have wider community benefit through proposed heat networks, while businesses and residents are becoming more carbon conscious.

More SMEs could enter large companies’ supply chains and supply the public sector. Recent successes include small tech businesses supporting large manufacturers to change, local construction firms delivering higher social value, and port services firms supporting the offshore wind sector, but more could be done to open up opportunities to SMEs and support them to access them.

Issues to be dealt with The Humber economy has made substantial progress over recent years, but there are still some issues that will need to be dealt with if it is to reach its full potential.

The Humber is growing, but needs to grow faster to keep up. The value of the Humber economy (GVA) has increased by 12.2% (nearly £2.1bn) since 2012 – but regional (16.3%) and national (20.7%) growth was faster. The Humber’s productivity (GVA per hour worked) is mid-ranking amongst Northern LEP areas, all but one of which lag behind national performance. Since 2010 most, including the Humber, have seen a decline in performance. The Humber’s GVA per job is behind the national average in all sectors, with the exception of Manufacturing. If productivity in the sectors prioritised for the Local Industrial Strategy matched the national average, the Humber economy would be £2.28bn bigger.

Recruitment issues are a concern for some businesses. This is compounded by a reduction in the Humber’s working age population of 2.2% (12,600 people) between 2012 and 2017, lower international migration and an ageing workforce giving rise to increased replacement demand and higher levels of dependency over the coming years.

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The Humber needs to improve business start-up, scale-up and survival rates. Business density has risen and is now similar to regional levels, but the Humber still needs to create an additional 6,700 businesses to match the national density. Between 2017 and 2018 the number of businesses fell slightly, and start-ups fell in line with national trends to the lowest level since 2012.

The Humber is creating jobs faster than other regions, but they are not evenly spread. In 2017 there were 13,000 more jobs in the Humber than in 2015, an increase of 3.4% - a bigger improvement than regionally (2.0%) and nationally (3.1%). However, they have not been evenly spread around the Humber: 85% were created on the North Bank. Jobs density is similar to regionally, but a further 28,800 jobs would be needed to match national jobs density.

The Humber needs to create more better-paid, higher-skilled jobs. In the year to December 2018, low skilled occupations accounted for 23.0% of all occupations in the Humber, higher than nationally (16.6%) and slightly higher than in 2012 (21.4%). Since 2012 there has been a 14% increase in low-skilled occupations, compared to an 8% increase in highly-skilled occupations. An additional 42,900 highly-skilled jobs would need to be created in order to match the national average.

Skills levels across the Humber have lagged behind other areas. In the years to 2016 the Humber tracked national improvements and, in some cases, narrowed the gap. However, between 2016 and 2018 the Humber saw a downturn across all qualification levels; this may be due to several factors including changing demographics, the reduction of funding for adult qualifications and the introduction of the Apprenticeship Levy alongside the retirement of more highly qualified employees. We will need to rectify this to avoid further skills shortages.

Automation will affect some of our key sectors. Manufacturing, energy and ports and logistics sectors are all likely to experience increased automation in the coming years. Humber businesses will need to be on top of these changes to be competitive, but may need support to adapt and to up-skill their workforces.

Our places need to adapt to change. Retail jobs make up 10% of the Humber’s employment, but since 2012 there has been a 6% decline in the number of retail businesses – in contrast to a 6% increase nationally. Some analysis suggests the Humber is being hit harder by changes to the high street than other areas, but city centre living is now making a comeback in Hull. The Humber’s city and town centres will need to adapt to be sustainable.

Climate change is more of an issue for the Humber than most. As recent large-scale flooding events in 2007 and 2013 show, the Humber is vulnerable to climate change with the second highest flood risk in the UK. Substantial investment in flood defence infrastructure is mitigating the risk, but more will still be required to protect homes and businesses.

The Humber is a high-carbon economy facing potential upheaval. The Humber’s industrial cluster emits more CO2 than any other UK cluster (30% more than the next largest). At least 20% of the Humber economy is based on energy-intensive industries, several of them nationally-important assets, which are also directly and indirectly large emitters of CO2. If not carefully managed, decarbonisation could be a serious local economic shock that would also be damaging to the wider UK economy.

Some parts of the Humber are heavily dependent on a narrow range of industries. Whilst the Humber economy as a whole is relatively diverse, some places within it are vulnerable to economic shocks should the outlook deteriorate for major local sectors. Others depend on the seasonal tourism sector and face difficulties in developing sustainable year-round employment.

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Uncertainty caused by Brexit is affecting our economy. The Humber is particularly exposed to a no- deal Brexit: products made here are exported around the world, new border checks could impact on the Humber ports and surrounding infrastructure, and many of our businesses are covered by European regulatory arrangements. Many businesses are looking to new opportunities after Brexit, but in the short term investment projects are being delayed and our future success may depend on what deal is agreed.

Transport infrastructure needs to keep pace with growth. As our economy grows congestion hotspots are worsening and resilience is an issue, while some rural and coastal communities are distant from new job opportunities. Planned major schemes like the A63 Castle Street will make a significant difference. However, comparatively weak rail connectivity to the rest of the North, and from Northern Lincolnshire to London, limits travel for employment and forces business travellers on to the roads, whilst rail freight is also constrained. More radical improvements to mobility will be required in the future to support continued growth and access to employment.

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Our framework

The framework for our industrial strategy was launched in 2018 in The Humber’s Blueprint for an Industrial Strategy. Sectors Based on business engagement and analysis of our economy, we identified the sectors in the Humber economic system that will drive our future growth and productivity. These are sectors that are distinctive to our region and where the Humber has both existing strengths and new potential. They are interconnected: each sector contributes to the success of others, and by developing closer ties between them we will be able to address some of the Humber’s issues and opportunities. For ease of reference, we have grouped the Humber’s sector specialisms into the following broad areas:

Since last year, we have deepened our understanding of these sectors through further business engagement and detailed economic analysis, enabling us to develop the approaches we are proposing in this document. We are inviting further feedback from the sectors on our proposals.

Other sectors – including agriculture, health and social care and the visitor economy – continue to be important to the Humber. We will provide support for these through our wider work on the five foundations of productivity.

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Foundations of productivity Our Blueprint also confirmed that we will adopt the Government’s five foundations of productivity in our approach, building on the progress we have made on these through our Strategic Economic Plan. These will be fundamental to the long-term competitiveness of our economy and boosting the earning power of our communities.

Grand Challenge The Government identified four Grand Challenges in its Industrial Strategy. Whilst the Humber will have something to contribute on all of these, our Blueprint confirmed that our primary focus will be on Clean Growth. This is the area where the Humber has the most to offer and most to gain from concerted action. Cross-cutting themes Our Blueprint also identified three cross-cutting themes that matter to the Humber:

Raising productivity and competitiveness is a priority in the Government’s industrial strategy. The Humber has made some improvements over recent years, but will need to ensure each of its sectors is as productive as the best to remain competitive in the future. Addressing the five foundations of productivity, as well as sector-specific activity, will enable us to make further productivity improvements.

We are committed to pursuing growth that benefits our local communities. Ensuring local residents feel a positive impact from our industrial strategy, and that they have every chance to access the new opportunities that will be created, will help to address a legacy of high deprivation in parts of our region. We want our industrial strategy to create better, higher paid jobs that will boost the earning power of our communities.

The Humber’s natural assets, including the internationally-designated Humber Estuary and the North Sea, are also economic ones. A challenge for us is to balance economic growth with environmental sustainability, ensuring that our environment is protected for future generations, and the Humber mitigates the risks it faces from climate change.

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Accelerating clean growth on the Energy Estuary

The Humber Energy Estuary is at the heart of the UK’s energy supply, and one of its main industrial clusters.

Our region generates a significant part of the UK’s energy, increasingly from renewable sources. Our energy-intensive industries create products that the wider economy and society depend on, including steel, petrol, chemicals, plastics and cement.

Through these processes our region emits more CO2 than anywhere else in the country, whilst being one of the places most vulnerable to climate change.

Our aim is to accelerate clean growth on the Energy Estuary with a transition that works for our businesses and residents.

We will achieve this by expanding our clean energy cluster and using it to drive change across our communities, whilst securing the long-term sustainability of our vital energy-intensive industries. In doing this the Humber will become the first industrial region to reduce its net CO2 emissions to zero by 2040.

Rationale Decarbonisation is the most significant challenge, and the greatest opportunity, for the Humber economy over the next two decades.

The UK is committed to change through the Paris Agreement on Climate Change, which aims to limit global temperature increase to no more than 1.50c, and the Climate Change Act, and this commitment is integral to the UK Industrial Strategy, Clean Growth Strategy and 25-year Environment Plan. The publication of the IPCC Report1 on the route to a 1.50c trajectory means that deeper and swifter carbon reduction is required to deliver a net zero economy.

Decarbonisation matters more to the Humber than most places in the UK:

• The Humber is especially vulnerable to climate change, with an economy dependent on water and the second highest flood risk in the country.

1 https://www.ipcc.ch/sr15/chapter/summary-for-policy-makers/

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• At the same time, the Humber’s industrial cluster emits more CO2 than any other UK cluster (30% more than the next largest). • At least 20% of the Humber’s economy is based on energy intensive industries, which are also directly and indirectly large emitters of CO2. If not carefully managed, decarbonisation could be a serious economic shock. • Decarbonisation is also a major economic opportunity – low carbon sectors are growing significantly faster than the wider economy. Where we are now The Humber is acting to mitigate its risks from climate change, including with substantial investments in flood defences. The Living with Water project, a collaboration of Hull City Council, East Riding of Yorkshire Council, Yorkshire Water and the Environment Agency, is exploring how communities can be more resilient to flooding. However, we also need to reduce our contribution to climate change.

The Humber region is a large producer of carbon dioxide emissions2 compared to other parts of the UK. By 2040 the costs to businesses and the public sector of not adjusting and adapting could significantly affect the region’s GVA. There are 35,000 jobs (10% of all current employment) in sectors that are likely to be affected by the low carbon transition.3

The last year for which data is available, 2016, shows that the Humber’s carbon emissions4 per person were 13.8 tonnes but set within a wide spectrum, with Hull’s being the lowest at 4.3 tonnes and North Lincolnshire’s the highest at 45.7 tonnes reflecting the presence of energy intensive industrial production within the economy. Overall the Humber’s emissions are 9 tonnes per person higher than the national average. The challenge therefore is to get the per capita figure to as close to zero as possible over the next 20 years.

The UK cannot decarbonise without the Humber. The Humber can make two major contributions to the UK’s decarbonisation goals: it is leading the way on clean energy generation, and it has a dynamic industrial cluster which is both essential to the wider UK economy and ideal for piloting an ambitious approach to decarbonisation. These are set out in more detail in the following two chapters.

What the Humber has lacked until now, and no industrial region has yet to achieve, is a co-ordinated effort to pursue decarbonisation across the economy and society whilst delivering maximum economic and social benefit. Our plan is to deliver this through our industrial strategy. Our approach To enable the Humber to become a net-zero carbon industrial region by 2040, whilst protecting strategically-important industries and maximising benefits for local communities and businesses, we will need to:

2 Carbon emission in this chapter refers to those derived from a “production emissions” assessment. These are emissions directly arising from activities undertaken in the Humber but does not included the embedded carbon in products that are used/consumed in the Humber but manufactured elsewhere. Emissions assessed through a “consumption emissions” model takes account of emissions generated elsewhere but from products consume din the Humber. An assessment of the Humber’s consumption emission will be undertaken as an action form the Local Industrial Strategy as part of an ongoing evidence base development. 3 “Sustainable Economic Growth and a Low Carbon Hull & Humber City Region” Roger Tomlin 4 “UK local authority and regional carbon dioxide emissions national statistics: 2005-2016” Department of Business Environment and Industrial Strategy

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Commit to a whole-place approach to decarbonisation. Our ambition is to tackle decarbonisation across our economy and society, including energy, industry, business, the public sector, homes and transport. This proactive, co-ordinated approach will enable us to bring sectors together to achieve common goals, maximise efficiencies and reinforce local benefits. Parts of the Humber will be able to move faster than others: for example, Hull is targeting net-zero carbon emissions by 2030, but it will be more difficult to achieve this in other areas.

Continue to develop as a global centre for clean energy generation. The Humber is already playing a significant part in decarbonising the UK’s electricity supply, and will need to continue to develop this position for the UK to make this transition.

Remain a home for energy-intensive industries. The Humber’s energy-intensive industries are a critical part of the UK economy. Supporting them to decarbonise will help them to be competitive and to secure their long-term future.

Transition transport to electric and hydrogen fuel. This will require new infrastructure and the replacement of existing fleets. Shipping through the Humber ports will also need to be part of this transition.

Deliver higher energy efficiency standards for residential, commercial and industrial buildings. Reducing individual energy demand through greater efficiency will be an important part of the transition. Investment will be required to deliver measures to existing properties, but the Humber could pilot regulatory changes to ensure new properties meet higher standards.

Transition building heat in urban and rural areas to low carbon sources. This will include the roll-out of district heating in urban areas, as well as heat pumps, electric heating and hydrogen.

Become a testbed for new technologies, processes and business and regulatory models. Innovation is at the heart of decarbonisation. The Humber can develop and pilot the new and integrated approaches that will be required to achieve the transition.

Be the first region to deploy carbon capture, utilisation and storage at scale. The Humber is already piloting bioenergy carbon capture at Drax, the first such pilot in Europe. It is ideally suited to developing a carbon capture network linking power generation and industry with storage under the North Sea. Our tradition in horticulture is an example of how captured CO2 could be used in the region in the future, building on experience in the Netherlands.

Maximise the contribution of our natural capital. Building on our unique Single Conversation approach, we will need to ensure that growth is sustainable and the Humber’s natural capital is responsibly managed. The Humber Estuary’s natural resources like mudflats are well-suited to sequestering carbon5, while the new Northern Forest could also help offset emissions.

Maximise local business and community benefits. The decarbonisation transition will make the Humber attractive for new investment, and create numerous new business opportunities in the supply chain. Decarbonisation projects can also create wider community benefits, such as capturing waste industrial heat to heat local homes.

5 “Investing in Natural Capital” Humber Nature Partnership

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Develop a joint public/private team to deliver the transition. The Humber will require a joined-up effort, including new dedicated capacity, to design and deliver the kind of multi-partner, multi-sector projects required to decarbonise the region. Government support will also be crucial for the Humber to decarbonise at the pace required.

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Clean energy generation

The Lincs wind farm (Photo: Ørsted)

Our ambition is for the Humber Energy Estuary to be a global leader in clean energy generation.

Rationale Energy is an essential foundation for economic growth. The UK is transitioning to cleaner sources of energy, and the pace of change is set to accelerate. Over just a few years, the Humber has transformed into one of the world’s leading hubs for clean energy. Now our region, the Energy Estuary, has a vital role to play as the sector prepares to scale up, and the opportunity to land an even greater economic impact for the UK in the face of overseas competition.

The Humber Energy Estuary makes an important and diverse contribution to the UK’s energy mix, including:

• Offshore wind: Manufacturing of blades, assembly and installation from Siemens Gamesa’s facility at Greenport Hull; and operations and maintenance from the Port of Grimsby, with Ørsted, Centrica and E.on amongst others. The Humber also has over 20 operational onshore wind farms. • Biomass: Drax power station in Selby is the world’s largest decarbonisation project, having converted four of its six units from coal to biomass. The Ports of Immingham and Hull import some of the biomass for Drax, with Immingham capable of unloading 2,300 tonnes of biomass an hour. • Gas: A third of the UK’s gas is landed and processed at Easington by Gassco, Centrica and Perenco. The Humber is home to several gas-fired power plants with more, such as Keadby 2, planned. Drax is also planning to convert one or both of its remaining coal units to gas. • Oil refining: Two of the UK’s six oil refineries, Phillips66’s Humber Refinery and Total’s Lindsey Oil Refinery. • Biofuels: Greenergy’s Immingham plant fulfils a significant part of the UK’s biodiesel requirement from waste and rapeseed oil. • Energy from waste: Several operational energy from waste plants and more planned. • Storage: Underground storage sites for gas, both onshore and offshore, and growing interest in battery storage. As a result of the Sector Deal, offshore wind, now a low-cost energy source, could contribute up to a 30GW or a third of UK electricity by 2030 – an investment of over £40bn in infrastructure over the next decade.

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This includes a commitment to increase UK content to 60% by 2030, and a £250m investment in the UK supply chain. The industry has predicted that employment will rise from 7,200 to 27,000, and committed to increased diversity. The Humber Energy Estuary’s location, infrastructure and skills means that it could attract a significant part of this investment.

The Humber is also well-placed to develop a hydrogen economy, expanding on existing production with the help of carbon capture technology and large-scale deployment of electrolysis using clean renewable power. Similarly, the Humber also has potential to support the further use of ammonia as an energy vector. Where we are now Offshore wind manufacturing, installation, operations and maintenance now have firm foundations in the Humber, creating skilled jobs and helping to attract a wider supply chain. The Humber is centrally located for the largest offshore wind farms under construction and planned, and has the land, ports and skills to support the sector, meaning that its future prospects are also strong. These include:

• Short term: supporting existing wind farms and the development of Hornsea (the world’s largest wind farm), East Anglia ONE and Triton Knoll. Hornsea 1 and 2 are under construction, Hornsea 3 is awaiting planning consent and Hornsea 4 is in development. Triton Knoll will start construction in 2019. • Medium term: Race Bank extension. • Longer term: The Crown Estate is developing its plans for Round 4 leasing, with the largest proposed zones (Dogger Bank, Southern North Sea, and East Anglia) and zones under consideration (Yorkshire Coast and The Wash) again located off the Humber. The Committee on Climate Change has advised that at least 75GW of offshore wind capacity will be needed by 2050 for the UK to achieve its decarbonisation target.6 If the Government accepts this, the sector could scale up even further.

The Humber has more companies in the offshore renewables sector than anywhere else in the Northern Powerhouse and Scotland7 and the sector is continuing to invest. In Grimsby Ørsted’s £14.5m expanded East Coast Hub is due to open later in 2019, employing more than 310 people, and Innogy’s planned base for Triton Knoll will create 170 jobs.

Aura, a partnership of the Universities of Hull, Sheffield and Durham; the Offshore Renewable Energy Catapult; and industry, aims to create a world-leading, multi-disciplinary offshore wind and low carbon energy innovation hub. The new Aura Innovation Centre at Humber Bridgehead, opening in Q4 2019, will be a focal point for this work and will work with SMEs at any stage of the innovation process. The £5.5m Aura Centre for Doctoral Training will meanwhile create opportunities for over 70 post-graduate PhD students focussing on offshore wind and the environment. A £7.6m research partnership is already under way.

Investment in training facilities at the Humber’s colleges, two university technical colleges and CATCH, as well as Siemens Gamesa’s decision to relocate and expand its training centre in Hull, is supporting workforce development and local residents to access the new jobs being created. Providers are working in collaboration through the Humber Energy Campus to respond to the industry’s requirements.

6 Net Zero – The UK’s contribution to stopping global warming (2019) 7 ORE Catapult and Technopolis analysis (2017) in Offshore Renewable Energy Science and Innovation Audit

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The Humber’s location and role in blade manufacture and installation means that we are also well-placed for repowering existing Round 1 and 2 turbines as well as Round 3 in the future. In the medium term, there will be an opportunity to create new industry in the Humber in the recycling and remanufacturing of old turbine equipment. This will require innovation in material separation as well as the development of new products from the materials. The Humber could be at the heart of an offshore turbine circular economy industry which by 2030 will see the need to decommission around 750MW of wind capacity and recycle more than 600 turbines each year.8

The Humber is also contributing to other parts of the energy mix. Two thirds of the UK’s biomass is imported, with dedicated facilities at the Ports of Hull and Immingham handling biomass for Drax power station. Investment is also being attracted in energy from waste facilities, including Spencer Group’s Energy Works in Hull (currently under construction) and Velocys’s plans to develop the UK’s first commercial scale waste-to-jet-fuel project on the Humber Enterprise Zone near Immingham. Conditions in the biofuels sector have been more challenging, however. Vivergo’s £350m bioethanol and animal feed plant at Saltend ceased production in 2018 and is currently mothballed.

Collaboration with other parts of the North is important for the further development of the sector. The Humber LEP is joint lead on energy (with Tees Valley) for the NP11 group of LEPs, and will host an international energy conference for the North in November 2019.

The LEP is developing a Local Energy Strategy to take advantage of the presence of clean energy in the region and ensure this supports the wider economy. Our approach The Humber can be at the forefront of the next phase of the offshore wind sector’s development – ensuring more of the value chain is captured for the UK, and helping this new national success story transform into a major exporting industry worth a targeted £2.6bn per annum by 2030. Our ambition is for the Humber to support at least half of the offshore wind capacity installed in the North Sea in the years to 2030, through manufacturing, construction and/or operations and maintenance. The Humber can also continue to support the development of other diverse parts of the energy mix, supporting UK energy security.

To achieve this we will need to:

Provide the land and port facilities in the right place. The Humber has the capacity to support expanded manufacturing, installation, operations and maintenance activity in closest proximity to the largest offshore wind zones, and is the only place in the UK where there is space to develop a large-scale cluster. Our deep water ports also mean we can handle the largest vessels required for wind farms further from shore. Our infrastructure also makes us well-suited to support other forms of clean energy generation. We are already investing in enabling infrastructure for our port-side Enterprise Zones to ensure they are ready, and will continue to work with the sector to review requirements.

Collaborate with other areas and Government to scale up the offshore wind sector. The Humber is particularly well-suited to support the top-side, whereas for example the North East and Tees Valley have specialisms in sub-sea work. By working in collaboration, including through the NP11 group of LEPs, we can deliver a stronger UK offer.

8 https://www.energylivenews.com/2018/10/01/investing-e1bn-in-port-facilities-could-cut-offshore-wind-costs-by-5/

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Stimulate local supply chain development. Building on the success of the Green Port Hull programme, we will work with the Offshore Wind Growth Partnership to support the expansion of the offshore wind supply chain in the Humber. This will include targeted support to SMEs, a growing portfolio of sites and purpose-built facilities, and access to established sector networks.

Support the sector to solve its innovation challenges. We will continue to support the Aura partnership, a collaboration of three universities and the Offshore Renewable Energy Catapult which is backed by industry. We will also support the development of greater linkages with our tech cluster.

Be the national centre of excellence for offshore wind skills. Through the Humber’s education and training facilities and partnerships we will support the development of the sector’s current and future workforce, including people working from the Humber and around the world.

Prepare for decommissioning and repowering work in the medium-term. The Humber’s strengths for manufacturing and installation also make it well-suited for future decommissioning and repowering. We will work with the industry to explore these opportunities as they develop.

Embed clean energy in the local energy system and wider economy. The presence of clean energy can open up new opportunities for the Humber as a greener energy-intensive economy. We will support existing businesses to realise this potential, and develop the Humber’s proposition for attracting new investment in this area. The Humber bid to the Strength in Places Fund, led by the University of Hull, would help to accelerate this approach.

Innovate with battery storage and alternative energy vectors like hydrogen and ammonia. The Humber’s assets mean it can contribute to developing energy storage models that could enable the further roll-out of offshore wind and other forms of renewable energy, as well as support the decarbonisation of transport.

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Rationale Energy intensive industries are industries where energy usage makes up a significant part of production costs. Continuous process describes manufacture where materials are continuously in motion, undergoing chemical reactions or subject to mechanical or heat treatment. Production is usually 24 hour, 7 days a week with infrequent maintenance shutdowns.

The Humber’s significant energy-intensive sectors include steel, chemicals, oil refining, cement, lime, glass and food processing and storage. The Humber is also home to some less energy-intensive process industries, such as pharmaceuticals. We have placed these sector specialisms into a broad group because our research and engagement has shown that they face many common issues and opportunities, but not all will apply to every sector. We would welcome further views on this approach.

Consultation with local stakeholders has identified several challenges facing these sectors:

• Global competition: Many of these sectors operate in global markets with intense competition, and are affected by international issues like relations between the US and China. Overseas competitors sometimes have lower cost bases and more relaxed regulation, making it harder for British manufacturers to compete – even with higher quality products. With many multinationals operating here with headquarters overseas, the UK and the Humber also need to remain competitive compared to other global locations for internal company investment.

• Decarbonisation: This sector’s CO2 emissions are amongst the most difficult and costly to reduce, particularly where high-temperature processes are involved. The regulatory environment will need to be stable and the transition carefully managed to protect these industries, which provide products society needs. • Energy prices: The UK’s electricity prices for the largest users are amongst the highest in the EU – 56.9% above the EU15 median, or 64.4% above when environmental taxes and levies are included. However, industrial gas prices are the second lowest in the EU15.9 • Commodity exposure: The sector is heavily exposed to commodity markets prices and the foreign exchange market. Having stability within the UK is essential to drive a balanced cost base for the sector. Most products produced require a supply network from outside the UK and are reliant on energy, oil and chemical based commodities that have seen recent volatility due to international tensions, both politically and economically. Stable exchange rates are vital due to the large volume of imports and exports. The sector is predominately traded in US Dollars, so the recent decline of Sterling has impacted profitability. • Labour: Recruitment issues cause concern for succession planning, particularly for skilled managers and senior executives. • Brexit: Uncertainty around the EU withdrawal process and future relationship has held back new investments and affected orders. The future financial and regulatory environment will be significant for the UK’s competitiveness. Exports to continental Europe are high, so the imposition of tariffs

9 BEIS international industrial energy price statistics (May 2019)

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would hinder existing businesses and potential future businesses. However, employment of EU nationals is low so changes to free movement would have little impact. Where we are now The Humber is a major site for energy intensive and continuous process industries, with the highest concentration of direct employment in the Northern Powerhouse as well as further employment in supply chains. The sectors account for around 20% of the value of the Humber economy.

Key assets include:

• Two of the UK’s six oil refineries, Phillips66’s Humber Refinery and Total’s Lindsey Oil Refinery, accounting for around 25% of UK capacity, and biofuel producers like Greenergy. • British Steel’s Scunthorpe steelworks, one of two integrated steelworks in the UK. • Two major chemicals clusters, Saltend Chemicals Park and the South Humber Bank, making the Humber one of the UK’s four main chemicals-producing regions. Businesses include Air Products, BOC, BP Chemicals, Ineos, Nippon Gohsei, PX Group and Solenis. • Cement, lime and glass manufacturing plants, with companies like Cemex, Singleton Birch and Guardian Industries. • One of the UK’s largest concentrations of food manufacturing and cold storage. • Leading healthcare technology and pharmaceuticals businesses like Smith & Nephew, RB and Indivior. In May 2019, British Steel entered compulsory liquidation and control of the company passed to the Official Receiver. At the time of writing, a process for identifying a suitable buyer is ongoing.

Some businesses in these sectors continue to re-invest large amounts in the Humber to ensure their plants operate safely and efficiently, and to take advantage of new opportunities. The Humber also continues to attract new investment, such as the plans recently announced by Ineos to build a £150m Vinyl Acetate Monomer plant at its Saltend site. However, investment interest has slowed with uncertainty over Brexit.

The sector also has the potential to attract new businesses to the region. For example, the Phillips 66 Humber Refinery is the UK’s only manufacturer of petroleum graphite coke, used in both electric vehicle batteries and consumer electronics and exported around the world. Phillips 66 is looking to work with the UK government and industry on the development of a UK automotive low-carbon supply chain, potentially located on the Humber bank.

Whilst many businesses from these sectors are performing well, for a small number the combination of the adverse issues described above and other legacy issues means that they are in a more vulnerable position. These are not just major local employers: some have extensive regional supply chains that depend on them, and they are strategically-important industries to the UK economy. Without them the UK’s industrial capabilities would be permanently undermined, and the area would face a major economic shock with long- term consequences for decommissioning and decontamination. Therefore it must be a national priority, as well as a local one, to support their long-term competitiveness in the Humber.

During 2018, the Humber LEP with CATCH commissioned the Carbon Trust to conduct an in-depth study into the Humber’s energy intensive industries, funded by BEIS. The study’s recommendations are being taken up through the development of the local industrial strategy.

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Our approach We want the Humber to remain a home for vital energy-intensive and continuous process sectors, building on the strengths of our existing cluster to make it more competitive and sustainable for the long-term. To achieve this we will need to:

Support the Humber cluster to decarbonise. As set out earlier in this prospectus, decarbonisation is one of the greatest challenges facing our industrial economy as well as an opportunity to create new value. The cost-effective reduction of emissions, and capture of those which cannot be eliminated, will be crucial for the long-term competitiveness of our cluster but will require a collaborative effort and Government support.

Develop industry leadership. CATCH provides a voice for these sectors in the Humber and already facilitates collaboration on training and safety. We will support CATCH to be a best practice cluster management organisation.

Support collaboration to pursue new business opportunities and increase efficiency. With greater facilitation, the Humber cluster’s existing assets could be leveraged to pursue new opportunities through industrial symbiosis. Diversification of existing operations, and master-planning under-utilised sites to bring in complementary businesses, can support sustainability.

Re-use and re-purpose legacy industrial assets to deliver clean growth. Currently high carbon industrial assets could be transitioned to new uses, for example in processing suitable waste materials, developing a circular economy.

Champion the use of British-made products with more longer-term certainty. For example, British- made steel is amongst the highest quality in the world, and a range of other quality building products are manufactured in the Humber. Buying British for major infrastructure and building projects, with a long-term pipeline of work, would provide greater certainty to the industry.

Support the commercialisation of new ideas and the growth of existing SMEs. Learning from the success of the Green Port Hull programme, SME and supply chain development support could enable more growth in these sectors. We will also explore whether there is a need for dedicated incubation facilities for SMEs in the chemicals and process sector.

Address recruitment issues. Continued investment in both technical and management skills, and support to raise awareness of the career opportunities in these sectors, will be essential for addressing replacement demand and new skills requirements as the sectors change.

Overcome barriers to taking forward innovations. The Cluster Study recommended exploring the feasibility of creating a Process Industry Testing Hub, where new processes or methods of operation could be tested in a safe environment, and a Novel Business Models Accelerator to test solutions to known but un-tackled commercial barriers. We will work with CATCH and other partners to explore the potential of these ideas.

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Developing the Humber ports and manufacturing clusters

The Humber ports are at the heart of the Humber economy. As well as supporting the energy sector and energy-intensive industries, they also support a wide range of manufacturers in the Humber and across the UK to import materials and components and export their products.

The Humber ports are growing, but still have the space to do more. With that growth comes new challenges which must be addressed for the UK to remain competitive.

The manufacturing sectors that the Humber ports support are also growing, particularly in the Humber’s specialised engineering and assembly group of sectors. Existing businesses in the modular building sector are expanding, while the Humber is attracting new forms of assembly activity such as passenger trains.

The Humber can use these twin strengths to attract more value-added business through the Humber ports, creating new manufacturing jobs in the region.

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Rationale The Humber is one of Europe’s great trading estuaries. Our maritime supercluster of ports and associated activity is a nationally-significant economic asset which makes an important economic contribution. The ports and logistics sector could generate greater benefits for the North and Midlands, as well as the Humber area, with appropriate support and investment, as well as contributing to the Industrial Strategy priorities of clean growth, raising productivity, re-balancing the UK economy and exporting more to the world’s fastest-growing economies.

The maritime sector plays an important role in the growth of the world economy, moving an ever-increasing volume of goods cost effectively around the globe. The nature of seaborne trade has changed, with a rapid rise in containerised traffic expected to continue over the next 30 years.

The Government’s Maritime 2050 strategy recognises that the UK economy is highly dependent on the maritime sector, with 95% of goods exports and imports moved by sea, including nearly half of the country’s food supplies and a quarter of its energy supply. The UK’s continued success as a global trading nation is dependent on its ability to import and export goods efficiently. This is particularly important as the UK plans its future trading relationships post-Brexit and seeks to increase exports to non-EU markets.

With vessel sizes increasing, there is growing demand on ports to efficiently unload, handle and transfer cargo to ensure that shipping is as efficient as possible. This requires excellent facilities to move goods efficiently from ship to rail or road and then onto their destination. The Humber ports’ competitiveness will depend on offering their customers high quality, efficient and reliable options for onwards movement.

The ports and logistics sector is also changing as a result of technological development, with digital systems being adopted by ports like Rotterdam to manage the transfer of cargo and enable customers to track their goods. The move towards autonomous vehicles and driverless technologies is expected to have a significant impact on jobs and future skills requirements, including the oversight and monitoring of new technologies and advanced machinery.

Ports and logistics businesses in the Humber report an ageing, male-dominated workforce, as is the case in the sector nationally. Research undertaken with Humber businesses highlights impending skills shortages in the sector, with roles affected including deckhands, workboats crew, ship operations, offshore logistics operations, port agency drivers, and shipbuilding tradesmen.

International shipping accounts for an increasing proportion of global greenhouse gas emissions (2.2%) and, whilst the demand for seaborne trade is expected to continue, there is a growing drive to ensure that this is done sustainably, with ships becoming more fuel efficient and the least polluting transport options adopted where possible.

As part of the ‘Energy Estuary’, the Humber ports are contributing towards clean growth, supporting the growth of the offshore wind energy sector as a key base for Operations and Maintenance (O&M) activity,

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and supporting onshore renewables through handling biomass imports to the UK. The Humber ports are also seeing the long-term decline of fossil fuel imports, including coal and petroleum, as the Humber plays a key role in the UK’s shift to more sustainable energy sources.

As offshore wind has shown, the major economic development opportunity is in attracting and creating jobs from activity allied to the ports, rather than creating jobs directly as a result of greater throughput. The ports and logistics infrastructure within the Humber is particularly attractive to certain sectors/users who value the proximity to the ports. Key targets include:

• Businesses which will benefit from access to a market of 170m people within 24 hours • Businesses within the offshore wind supply chain • Manufacturers dependent on just in time deliveries of components • Distribution centres able to access 40+ million UK consumers within one HGV driver shift The Humber ports are already major contributors to UK trade, facilitating both exports and imports, and are an important generator of jobs, GVA and business activity for the Humber economy. There is an opportunity to capture a greater share of the UK’s international trade and lever greater value from the economic asset provided by the ports. Where we are now The Humber ports of Goole, Grimsby, Hull, Immingham and Killingholme handle over 40,000 shipping movements each year and 79m tonnes of cargo in the year to end Q3 2018. The Ports and Logistics sector employed 25,000 people in the Humber in 2017, an increase of nearly 50% since 2009, and contributes over £1bn to the Humber economy.

Immingham specialises in oil and coal, whilst Grimsby is a nationally significant car import terminal handling 500,000 imported vehicles a year, and has become an established O&M location for offshore wind firms Ørsted Energy, Centrica, Siemens, E.On and RES. Hull specialises in handling forest products and bulk commodities especially chemicals, alongside containers, ferry travel and roll-on / roll-off cargo, as well as growing green energy activities. Goole is the country’s most inland port and is well-linked to the UK’s rail and road infrastructure.

The Logistics Institute at the University of Hull is carrying out research with industry like the Liverpool– Humber Optimisation of Freight Transport (LHOFT) study, which is developing technology to enable multiple businesses to pool their cargo and transport needs. This would de-risk the provision of new freight services through the northern ports.

Considerable investment has been made in the Humber’s ports and logistics sector over recent years, improving its efficiency and competitiveness, including:

• £310m in the ABP/Siemens Gamesa Green Port Hull development for offshore wind • £40m in the Port of Grimsby to provide facilities to build and maintain wind farm assets • ABP is investing £120m to upgrade container terminals at Hull and Immingham, and improve its automotive terminal at Grimsby. • £65m has also been invested in the bulk terminal at Immingham, which handles imports for British Steel’s Scunthorpe plant. • Improved education and training facilities, including Modal Training and the Hull Trinity House Academy.

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• Investment is also being made in the transport infrastructure that provides access to the ports, including the completion of the £97m A160/A180 upgrade, gauge enhancement of the South Humber Bank rail line, and the A63 Castle Street upgrade planned to start in 2020. Future plans include the Able Marine Energy Park and Able Logistics Park and the Yorkshire Cruise Terminal. ABP are also undertaking masterplanning work to inform future investment priorities. State- owned ports in continental Europe are sometimes able to take a greater risk in forward-funding infrastructure ahead of need, so the Humber will need to remain proactive in order to be competitive.

Access to ports by rail and road is crucial to their competitiveness. Whilst improvements have taken place in the Humber, and more are planned, constraints on the trans-Pennine corridor on both the M62 and rail will need to be more effectively addressed for the Northern Powerhouse ports to fulfil their potential. Our approach The ports and logistics sector acts as an enabler for other priority sectors in the Humber, and can contribute to the achievement of national policy objectives. We intend to deliver a strengthened Humber ports and logistics sector which:

• Makes an increased contribution to the UK economy by: • Handling an increased volume and proportion of the UK’s international trade • Strengthening the competitive position of the UK’s importing and exporting sectors by offering them a high quality, reliable and cost effective service • Investing in R&D and adopting innovative approaches to keep the UK at the forefront of the international maritime sector • Makes an increased contribution to the Humber economy by: • Levering greater advantage from the ports as strategic assets by attracting more value- added activities to the Humber (e.g. manufacturing, distribution centres etc) • Supporting the growth of the Humber’s key sectors - clean energy, energy-intensive continuous process industries and engineering and assembly • Providing high quality employment opportunities for local residents • Contributes to national and local ambitions for clean growth by: • Encouraging a modal shift from road to rail transport for more of the freight passing through the ports • Diverting northern traffic from the southern ports, reducing the need to transport freight long distances by road within the UK • Facilitating the growth of the offshore wind and renewable energy sector • Reducing emissions generated by the sector within Humber through the adoption of clean technologies To achieve this we will need to:

Address the remaining transport bottlenecks that are holding back the growth of the Humber ports. Dealing with road congestion and upgrading rail freight infrastructure, both in the Humber and across the Pennines to Liverpool, will support the Humber ports to operate efficiently as strategic national assets.

Deliver the infrastructure which is required to maximise the impact of the Humber ports and increase their contribution to the Humber and UK economies. This includes both making better use of existing infrastructure and unlocking remaining port land for future development.

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Capitalise on new technologies to ensure the Humber ports remain at the leading edge of innovation within the sector. The Humber will need to work with the proposed Maritime Research Hub, consider how the findings of the LHOFT study can be rolled out, and develop innovative approaches to reducing carbon emissions.

Prepare the workforce for the Ports and Logistics sector of the future, ensuring alignment with other skills activity being taken forward across the Humber. The sector is changing, meaning that skills needs are changing too. The Humber can be a centre of excellence in ports and logistics-related training, raising skills levels within the existing workforce, and engaging with a broader and more diverse potential workforce.

Create a business environment which supports intensification and diversification of activity around the ports. This involves improving premises and site access, attracting new businesses to the Humber, and supporting the growth of smaller, indigenous companies in the sector to create a stronger business base.

Respond to the outcome of the Brexit negotiations. For example, depending on future arrangements, the Humber could target the development of bonded warehouses or seek to establish new incentives such as free zone arrangements.

Develop the ‘Humber Maritime Supercluster’ collaborative partnership amongst the key businesses and stakeholders within the Humber. This will provide the platform for sector leadership, marketing and a co-ordinated approach to delivering the change required.

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Engineering and assembly

Our ambition is to grow and improve the competitiveness of the Humber’s engineering and assembly sectors, supporting them to adapt to industry trends and leveraging the Humber ports to attract new and expanded manufacturing operations.

Rationale Engineering and assembly sectors are responsible for a workforce of almost 1 million people in England employed across 62,000 VAT-registered businesses. The sectors were worth an estimated £69.1 billion in 2017, reporting consistent annual growth since 2013.

We have defined the engineering and assembly group of sectors as the less energy-intensive production processes within the manufacturing sector, including the manufacture of wood; furniture; metal products; electrical equipment; machinery; motor vehicles and transport equipment.

The Humber’s existing specialisms include:

Caravans, specialist vehicles and modular building. The Humber has a long-standing strength in manufacturing caravans and holiday homes, as well as specialisms in bespoke vehicles, which has provided a platform for developing in the growing modular building market. Notable businesses include ABI, Swift, Willerby, Paneltex, Martin Williams, WHSV, Integra Buildings and Walker Modular. There is a strong focus on design and building methods are constantly being updated.

Furniture. The Humber is home to a cross-section of this varied sector, including kitchens, office and domestic furniture from firms like Wren Kitchens, Howdens Joinery, Legend Furniture and Elite Furniture. As consumer demand changes, smart technology is increasingly being integrated into products and sustainability is a focus.

Wood and wood products. Businesses like Tricoya and Yorkshire Timber Engineering are part of a growing industry, supported by increased housebuilding, rising consumer demand for natural and sustainable products, and a market shift towards low-impact buildings and offsite housebuilding. Most of the UK’s wood is imported, with around 27% coming via the Humber ports. Technology is increasing the

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quality and precision of the industry with ultrasound and laser scanners, while lean manufacturing techniques are increasing quality control, labour productivity and efficiency.

Fabricated metal products. This is a versatile industry that supports many others, including aerospace, automotive, construction and renewable energy. Notable Humber businesses include Ideal Boilers, Blackrow Engineering, DAM Structures and C.F. Struthers. However, the sector also has an over- representation of micro businesses, more of which may need to scale up to pursue supply chain opportunities. The sector is innovating with robotics and 3D printing, but also faces challenges with fluctuations in commodity prices, rigorous compliance standards and new skills requirements.

Machinery and equipment. This is a capital-intensive sector with businesses like Fenner, Sumo, Heald and Arxell serving diverse markets. Interest is growing in technology around the Internet of Things, and there are moves towards business to consumer and servitisation business models. Innovation is increasing, but so is demand for technically skilled workers.

The Humber ports play a crucial role in supporting these sectors, enabling the efficient import of materials and export of finished goods, which is one reason why so many businesses in these sectors have located here. There are also many local supply chain linkages, giving these sectors a strong foundation in our area. Where we are now Engineering and assembly sectors account for over 25,000 jobs and represent 6.1% of total employment across the Humber. Only Lancashire LEP (6.7%) and the North East LEP (6.4%) have a greater concentration of employment within these sectors across the Northern Powerhouse.

The sector is spread across the Humber, with locations including Hedon Road (Hull), Carnaby Industrial Estate, Cottingham, Brough, Howdendyke, and former airfield sites across parts of the Yorkshire Wolds on the north bank; and Barton upon Humber and industrial estates to the north of both Scunthorpe and Grimsby on the south bank.

The Humber’s strong business and skills base in these sectors, together with the availability of land in close proximity to the ports, mean that this is an area where we could achieve further growth – and not just in our existing specialisms.

Siemens Mobility’s plans to build a factory on the Humber Enterprise Zone at Goole to assemble trains for the London Underground, which will create 700 jobs, underline the Humber’s potential for attracting more large-scale assembly activity that relies on excellent transport connectivity. Our approach We want to capitalise on our existing strengths in engineering and assembly, and the asset of the Humber ports, to sustain further growth, innovation and productivity improvements in these sectors. To achieve this we will need to:

Support businesses to integrate new technology into their products and processes. To remain competitive Humber businesses will need to be at the forefront of integrating smart technology in relevant products, and adopting automation and additive manufacturing in their production processes. Building closer links with our developing tech cluster and academic institutions like the University of Hull could help more businesses to achieve this.

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Ensure there is an adequate supply of sites and premises. Some businesses in this sector have needed to move off constrained sites, or acquire additional locations, in order to expand. To ensure there is room for existing business growth and new business investment in the area, we will need to continue to open up sites for development and encourage more speculative development of premises.

Stimulate demand for modular building. A proactive approach to encouraging modular building for residential and commercial development, sourced locally, could support the sector to expand further.

Work with businesses to respond to their changing skills requirements. As new technology and manufacturing processes are adopted, more businesses will need access to specialist technical skills. This includes joined-up support to upskill their existing workforce, and ensuring that the workforce of the future will meet their requirements.

Prepare more businesses to scale up to access new supply chain opportunities. There are increasing opportunities for engineering and assembly businesses to enter the supply chains of larger businesses in these and other sectors highlighted by the LEP. Focussed support will equip them to meet the demands of these larger businesses.

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Developing our approach to other strategic sectors

The approaches we have proposed in this prospectus cover most of the strategic sectors identified in our Blueprint. In the next phase of our sector work, we will address the remaining sectors of digital tech, professional services and food.

Digital tech and professional services The Humber’s growing tech sector and specialist professional services sector are identified in our Blueprint as being enablers to our region’s future growth, and referred to in earlier sections for the contributions they will make to the competitiveness of other strategic sectors.

In the next phase of our sector work, we want to engage with tech and professional services businesses to develop our proposed approach to their sectors and understand how we can maximise their contribution to the wider economy. Some baseline analysis is published alongside this prospectus and we would welcome consultation responses from businesses in these sectors as well as others. Food The Humber is an important location for many types of food production, and the sector is a significant employer. It could be highly affected by Brexit, with potential changes to subsidies, tariffs, border controls and regulation. Future opportunities outside the EU could include import substitution, and potentially the re-introduction of marketing boards in a “no deal” scenario. Productivity issues include reducing waste, robotics, intensive farming and increasing collaboration. Improving sustainability is also a common concern, including emissions, packaging, soil and species protection and organic farming.

Some, but not all, of the food sector is energy-intensive and is referenced in our approach to energy- intensive industries. However, it also has some distinctive characteristics and – unlike most of the sectors in this prospectus – there are clear cross-border relationships with our neighbouring LEPs in Lincolnshire and North Yorkshire. We are therefore proposing to work jointly with our neighbouring LEPs to develop the food sector, creating a seamless approach for businesses across the three LEP areas.

We want to further develop our approach to the food sector (including seafood, food processing, agri-tech and primary agriculture) in the next phase of our work. As an initial step, we are publishing some baseline analysis of the food sector alongside this prospectus and would welcome further input from businesses in these sectors. Health and social care We sought to focus our Blueprint on the sectors where the Humber has a genuine comparative advantage and the prospect of future growth and productivity improvements that would cause a substantial shift in the local economy. The health and social care sectors did not meet these criteria, but remain significant local employers whose impact is felt across our area.

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Over recent months we have engaged further with representatives of the health and social care sectors, including senior local NHS leaders, to better understand the contribution they make to our economy. As a result, we are proposing to integrate health and social care in our approach to the five foundations of productivity. This could include, for example:

• Ideas: Through the Hull-York Medical School and partnerships with the local NHS, the Humber is an important location for medical research, complementing R&D taking place in the healthcare technology and pharmaceuticals sectors. • People: A healthy workforce is crucial to business performance, while addressing long-term health barriers to work would increase the Humber’s available labour pool. • Infrastructure: Cycling and walking infrastructure and natural capital like accessible countryside, parks and gardens can support people’s health and wellbeing. In addition to being large employers, hospitals are major fixed energy consumers and could collaborate in mutually- beneficial energy infrastructure projects. Access to health facilities is also an important consideration for transport planning. • Business environment: The health and social care sector is a substantial purchaser of goods and services, which could create more opportunities for local SMEs. Joint purchasing agreements between individual organisations can also drive improved business practice. • Place: NHS bodies are local anchor institutions and major employers, playing an important role in local place leadership. In order to attract talent to the region, access to high standards of health and social care services is vital as part of place benefit assessment. In addition to this, the Humber LEP will continue to work in partnership with the health and social care sectors to respond to their workforce requirements through our employment and skills activity. This includes part-funding projects like the Humber Healthcare Academy in Grimsby, and contributing to the Humber Coast and Vale Health and Care Partnership Workforce Board.

We would welcome further views on whether this is the right way to address health and social care sector in our industrial strategy, and what specific actions we could undertake with the sector.

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The five foundations of productivity

To continue the momentum we have in the Humber, we will need to take further action across the five foundations of productivity: ideas, people, infrastructure, business environment and places.

These foundations apply to businesses of all sectors and sizes across the Humber, and include areas where we want to work in collaboration with Government to develop our economy.

The following sections set out our emerging approach on the five foundations and the work we are doing to develop future priorities for the Humber.

Ideas The UK is a world leader in science and innovation, but has underinvested in R&D compared to other leading economies. Achieving the Government’s target of 2.4% of GDP being invested in R&D by 2027 will require a step-change in public and private sector investment.10 The Humber has the opportunity to position itself for future competitiveness by being part of this change.

National league tables and reports often present a negative picture of innovation the Humber, but our analysis shows that some of the headlines are misleading and the Humber’s strengths have been under- recognised. For example, much of the intellectual property created by large businesses in the Humber is patented through head offices in places like Slough, London and Memphis.

Businesses spent £152m on R&D in the Humber in 2016, or around £176 per person – more than in most big cities in the North but still a long way behind the UK leader, Cheshire, at over £1,300 per head.11 However, only around 2,700 people are employed in R&D and research roles in the Humber, accounting for 1.05% of the active population – half the UK average and 33rd of 40 NUTS3 regions12. But this may be set to change.

In recent years a series of multinational businesses, including RB, Smith & Nephew, Indivior, Croda, Ideal Boilers and Saab, have chosen our region for major new or expanded R&D facilities – making investments totalling over £200m. They join innovative SMEs, like those based at C4DI in Hull, in developing the products of the future; and businesses like Arco, Sewell and Wren which are investing in new technology to transform how they work.

The new Aura Innovation Centre, currently being constructed for the University of Hull, will provide a facility to encourage innovation in low carbon energy, while its Centre for Doctoral Training will create over 70 PhD places. The University’s Spark Fund programme is also supporting many SMEs with their innovation.

10 Industrial Strategy White Paper (HM Government, 2017) 11 Eurostat 12 Eurostat % of active population involved in R&D http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=rd_p_persreg&lang=en

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Through our industrial strategy, we want to develop a collaborative approach to building up the Humber’s Innovation Cluster, supporting business competitiveness and the creation of highly-skilled jobs. We also want to encourage more experimentation in our area, turning the Humber into a Living Lab that pilots new approaches and trials the latest advances.

As part of this, we need to ensure that more good ideas are turned into successful Humber businesses. We also recognise that to deliver the productivity improvements our economy requires, more businesses will need to adopt new technology, processes and business models – just as many of our leading firms have.

Our region cannot be world-class at everything, so we are proposing to prioritise the following areas where we have identified that the Humber has existing expertise and the potential for further development:

• Health, healthcare technology and pharmaceuticals • Energy and low carbon • Environment and water management • Logistics • Digitalisation of manufacturing

These would be our focus areas for new innovation investment, in addition to ensuring that SMEs continue to have access to innovation support. Next steps Through the consultation on this prospectus, we are seeking views on whether the innovation specialisms we have proposed are the right ones for our region.

We have been engaging with a number of businesses with prominent R&D functions over recent months, and would like to hear more from them and other businesses we may not yet have spoken to about how they would like the Humber Innovation Cluster to develop and how they would like to be involved.

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People The Humber has led on a number of innovative pilots and seen improvements in key areas of skills delivery. However, despite making progress there is still a way to go to meet national benchmarks and the needs of local employers. Employment Although unemployment rates have dropped significantly, the Humber still has fewer people aged between 16 and 64 in employment than the national average. 5.4% of our young people aged 18-24 are unemployed, compared to 3.6% nationally.

The Humber also has higher numbers of people claiming Employment and Support Allowance and Income Support Allowance than in some neighbouring areas. March 2019 figures report 35,860 people in benefit with a further 9,870 claiming Income Support. These rates have seen very little improvement over the last five years with the majority of people reporting muscular skeleton and/or mental health barriers to work.

Although the Department for Work and Pensions delivers a range of interventions, people on longer-term benefits, particularly those in receipt of ESA, often receive very limited support. Whilst the majority of these people are not well enough to work, many wish to do so and would welcome additional support to engage positively, whether directly into work or via an agreed supported pathway to enable positive progression.

Locally-led support includes the ESF-funded Springboard Programme for young people, which includes mentoring, coaching, confidence-building, education and training.

The Humber has some of the most deprived wards in the country. Multiple issues are often apparent in social mobility challenges, including education, health, access to opportunity, low skills, limited employment opportunities and low job quality. The development of new technologies, automation and robotics and the resulting reduction in lower skilled job roles will have further negative impact on those with limited skills.

The joint 2017 LEP report on Economic Migration indicated around a third of businesses had/would consider training UK staff to take the place of departing EU migrant workers although this was largely if they were required to do so. Similar proportions felt they would look into automating aspects of work if required, with this being most common in manufacturing and agricultural sectors. Due to the length of time to introduce automation or develop skills among the UK labour force, it is unlikely that either approach will be available sufficiently quickly to deal with any short-term impact of a departing EU migrant workforce. The general availability of labour and skills remain a significant challenge across the three LEP areas, due to the shortage of supply at present and the likely impact of potential increases in the cost of low-paid labour. Skills Humber skills levels have remained below regional and national averages. At Level 4 and above, the Humber has seen a decline from 30.7% in 2016 to 27% in 2018. Over the same period, Great Britain has increased from 38.2% to 39.3%. This change is also reflected for those with Level 3 and above qualifications, with 47.9% of Humber residents qualified to that level or above compared with 57.8% across Great Britain. At Level 2 or above the Humber has observed sustained improvements and made progress in terms of closing the gap with Great Britain, but between 2016 and 2018 the gap widened. More positively, the proportion of working age residents with no qualifications across the Humber has significantly declined since 2004, with the gap between the Humber and Great Britain at 0.4 percentage points in 2017. However, in 2018 the gap increased to 2.5%.

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The Humber benefits from some good and outstanding learning provision within our five FE colleges and four Sixth Form Colleges, from within the Humber’s two University Technical Colleges and in higher provision delivered by the University of Hull. This is in addition to over 300 private training providers, many of which deliver specialised training in areas such as advanced engineering, health and social care and refrigeration. A recent success for the Humber has been Government’s announcement of the Yorkshire and Humber Institute of Technology, one of only twelve in England. The Institute of Technology will use a circa £10m investment to develop new facilities to support higher level training in Digital, Agri-Tech and Engineering to help employers upskill their workforce. Local actions The LEP has used European Social Fund investment to enable a diverse range of programmes to assist young people and adults to participate in positive economic activity. This includes tailor-made programmes for young people and improving productivity for those in work via the Skills Support for the Work Programme, which has upskilled over 6,350 SME employees in a wide range of sectors.

The LEP has invested City Deal and Growth Deal monies in skills capital improvements aligned to growth areas and focussed on improving and growing provision of Science, Technology, Engineering and Maths. This has resulted in over 12,000 students taking STEM-related courses.

The LEP continues to deliver a number of innovative pilots, including a local standard for impartial careers education, information and advice that has been assessed as one of the national Quality in Careers Standards (the Humber LEP being the only LEP in the country that can award this kite mark); and a quality framework for Employability Passports, based on the CBI’s seven employability skills. Supported by the LEP, schools and colleges in the Humber are achieving an average of 2.8 of the 8 Gatsby Benchmarks against a national average of 2.5, with schools on the Humber Careers Hub scoring an average of 3.4. The Gatsby Benchmarks are indicators of good careers guidance and rely on schools and colleges using LMI to inform pupils/students.

Employers and other stakeholders are engaged with the skills agenda, including through the LEP’s Talent Forum, which provides real-time information on skills gaps, and its Skills Network. Next steps The LEP has commissioned Hatch Regeneris to produce the first data dashboards required for the Department for Education’s new Skills Advisory Panels, which in the Humber will be absorbed into the existing Employment and Skills Board. Further analysis will be commissioned to develop the People chapter of the local industrial strategy, which will be enhanced by qualitative local information.

The Humber LEP is consulting with local stakeholders on the implementation of Skills Advisory Panels during June 2019. The outcome of this consultation will help inform the Skills Advisory Panel headline skills priorities for which further analysis will be undertaken.

Through the consultation on this prospectus, we would welcome further input from employers on their skills priorities, and from all local stakeholders on the approach we should take in the People chapter of our industrial strategy. We are interested in seeking views on how we could use existing funding mechanisms from across government department in different ways, potentially via a pilot programme that would include several strands of work to test destination outcomes.

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Infrastructure The Humber has seen some important infrastructure improvements in recent years, and more are planned for the near future. However, to sustain the growth we are experiencing we need to be more ambitious still. Transport The Humber is relatively well connected to the rest of the UK and Europe. Recent road improvements, including the A160/A180 and A18/A180 to Immingham, the Beverley southern relief road and partial dualing of the A164, have relieved congestion in some parts of our region.

Work is under way on the Princes Quay bridge in Hull, and over the next few years improvements will take place on the Stoneferry Road Corridor in Hull, at Jock’s Lodge junction near Beverley, the South Humber Bank link road near Grimsby, and to de-trunk the M181 to enable housing growth. A final decision on the much-needed A63 Castle Street main scheme is also expected soon.

The upgrade of the South Humber rail line is nearing completion and will enable larger containers to leave the Port of Immingham by rail. Re-signalling work has also taken place on both sides of the Humber. New or refurbished passenger trains are being introduced throughout this year.

However, improvements to train frequencies have been limited and some rail journey times have slightly lengthened. Significant pinch points also remain on our road network.

As employment has risen, more people are using their cars to get to work. Often there is no alternative, because many of our employment growth areas are outside city and town centres with few public transport services. This puts some of these jobs out of reach for people without their own vehicles.

To sustain the Humber’s growth, we will need to take a more ambitious approach to transport in the region and our connectivity with other regions. This means continuing to address bottlenecks, but also looking further ahead to the major schemes that might be required to sustain growth in the long term, and developing a more integrated sustainable transport system – including exploring the case for new rail stations and bus interchanges, and expanding cycling infrastructure.

With Transport for the North, we will also need to secure better connectivity to other city regions, including a half-hourly train service between Hull and Leeds and a direct link to London from the south bank, as well as better trans-Pennine freight capacity. Flood risk Parts of the Humber are vulnerable to every form of flood risk. From tidal flooding from the Humber Estuary alone, 230,000 homes, 50,000 businesses and 120,000 hectares of high-grade agricultural land, as well as critical industries and road, rail and pipeline infrastructure, are at risk of flooding during an extreme flood event.

By 2021 over £150m will have been invested in flood defence improvements as a result of the current Humber Strategy, improving the standard of protection to 70,000 properties. The Strategy is currently under review, with three potential approaches – containing the tide, adapting to the tide and keeping out the tide by constructing a tidal surge barrier – being evaluated.

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Significant investment is also taking place to reduce the risk of flooding from other sources, including a new glass wall at Paull, a series of large lagoons near Cottingham, drainage improvements in Howdenshire and riverbank improvements near Burringham and Gunness.

The Living With Water project is exploring how communities can adapt to be more resilient to flooding. Digital Improvements to fixed broadband and mobile coverage have taken place across the Humber. Hull and surrounding parts of the East Riding have some of the fastest and most comprehensive broadband coverage in the UK, with KCOM having rolled out fibre to the premises for over 96% of properties in the city boundary. North East Lincolnshire exceeds the Government’s minimum 95% superfast target, but North Lincolnshire and the East Riding – with more rural areas to cover – still have further to go.13 Mobile “not spots” also remain across parts of our region. Next steps We have commissioned Arup to conduct a short-, medium- and long-term review of the Humber’s infrastructure requirements, and will use this to inform our approach.

We would welcome any further views on specific barriers and opportunities through our consultation on this prospectus.

13 Data from Thinkbroadband.com (correct May 2019)

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Business environment The Humber is already a great place to do business, with a welcoming business community, a range of support and low operating costs. Our ambition is to make it a more productive place that can compete internationally in more sectors.

Our region has a vibrant business community that comes together through supportive networks like the Chamber of Commerce, For Entrepreneurs Only, Team Humber Marine Alliance, CATCH, C4DI and Business Hive, and the unique Humber Business Week. Through the Humber LEP and other local partnerships, businesses are leading and engaged with the future development of our economy.

We also have a range of successful support organisations and programmes, like Hull Youth Enterprise Partnership, Sirius, the Acorn Fund, Growing the Humber and e-Factor, and the nationally-recognised Single Conversation approach to working on barriers to major developments. The LEP’s Growth Hub provides impartial signposting to all of these and more, and expanded its offer in 2018/19 after securing £6m ERDF funding.

The public and private sectors have made several recent investments in new and improved business accommodation, such as C4DI, ERGO and the Grimsby Offshore Centre, with more planned for the future, providing SMEs with quality workspace.

We have some great businesses that have gone from local success to become national brands. However, compared to the leading areas we don’t start enough businesses, not enough of the ones we start survive past the first few years, and too few of them scale up. Despite having the country’s largest ports complex, we also export less than we could. We will need to address all of this for our economy to achieve its potential.

Raising our productivity also means more of our businesses will need to challenge themselves to improve leadership and management at all levels, invest in the skills of their employees, and adopt new technologies, processes and business models.

Most of the support programmes available in the Humber are set up to support jobs growth rather than productivity improvements – a consequence of how they are funded. Productivity improvements do not necessarily create jobs, but they can mean higher skills and wages, as well as securing the business’s competitiveness for the future. Next steps We will review the publicly-funded business support programmes on offer in the Humber to see how they need to be adjusted, and we would like to work with our region’s membership and support organisations to see what more we can do to raise productivity together.

As part of our consultation on this prospectus, we want to hear from firms across the region on how the Humber’s business environment works for them and what we should work on through the industrial strategy.

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Places From city and town centres to business parks and industrial zones, market towns to coastal resorts, beautiful countryside to areas with potential for regeneration, the Humber is a diverse place with a lot to offer. For the Humber to reach its potential, every part of it will need to play to its strengths.

The Humber has achieved a lot over recent years despite some challenging circumstances, but some parts of the region have been more successful than others. Employment growth, the housing market and business start-up and survival rates have all varied amongst places. Parts of the Humber still have high concentrations of deprivation, whilst others are more prosperous. Some parts of the Humber have diversified into new industries, but others remain reliant on a small number of sectors which may be seasonal or vulnerable to change.

Every part of the Humber has something to offer. For the Humber to reach its full potential, every place within it will need to play to its own, complementary strengths. This will mean supporting city and town centres to adapt to the future, coastal resorts to develop year-round economies and underperforming parts of the housing market to improve, as well as spurring on the growth of our key industrial sectors. By doing this the Humber will be a more attractive place to live, as well as work and invest – crucial for remaining a competitive economy.

We will also need to continue to improve connectivity between places to ensure that everyone has the chance to benefit from the Humber’s increased earning power. The reduction in the Humber Bridge tolls has successfully reduced one barrier to movement: after a long period of stagnation, journeys across the Humber Bridge have risen by 52% and continue to rise above the national average, opening up new employment, learning and business opportunities. As a result, the Humber economic system has become more integrated which makes it more competitive for new investment.

The development of another pan-Humber cluster, offshore wind, has shown how the complementary offers of different parts of the Humber can work together to achieve economic success – with manufacturing and installation in Hull, innovation at Aura in the East Riding, operations and maintenance in Grimsby, and helicopter transport from Humberside Airport.

The Humber’s rich natural capital contributes directly and indirectly to our economy, with the specially- designated Flamborough Head and Bempton Cliffs attracting tourists to see the rare birdlife; the spit at the Spurn Point national nature reserve helping to retain the Humber’s deep-water channels which are essential for shipping; and 630 hectares of saltmarsh on the Humber Estuary acting as a buffer to tidal flooding. Natural capital, in the form of countryside and parks, also supports wellbeing and makes the Humber an attractive place to live. It can even help address decarbonisation, with the Estuary’s ecosystems helping to trap carbon and natural salt caverns ideal for storing CO2 or hydrogen in the future. The sustainable use of our natural capital will therefore be integral to our industrial strategy.

The landmark Grimsby Town Deal illustrates how an innovative locally-led approach, bringing together the local authority, LEPs, private sector, education and other stakeholders to build on the town’s unique heritage, can be successful. We want to extend this with further investment, in Grimsby and in other parts of the Humber, as we look ahead to the Stronger Towns Fund and UK Shared Prosperity Fund. As a first step we have allocated £1.95m from our Growth Deal in a pilot Humber High Street Challenge programme.

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Next steps As part of our consultation on this prospectus, we want to hear from business, political and community leaders across the Humber on how our industrial strategy could help them to realise the potential of the places they represent, and the roles they see their places playing in the future success of the Humber.

We will also be working with our neighbouring LEPs in Lincolnshire and North Yorkshire on common issues, particularly around the coastal and rural economies.

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Evidence base

This document has been informed by business engagement and economic analysis. Our evidence base contains the supporting data referenced in this report, and further discussion of policy priorities. It is available to view on the LEP’s website: humberlep.org/industrialstrategy

Further supporting documents will be published over summer 2019, including our Infrastructure Review and our Supply Chains Review.

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Consultation

The publication of this prospectus marks the start of a consultation on our priorities for the Humber’s future development, building on our previous rounds of consultation and engagement. We are inviting views and further evidence from people, businesses and other organisations across the Humber on our emerging approach.

Some specific questions are included below to prompt responses, but we would also welcome general feedback on our approach or responses on any of the proposed priorities or supporting evidence.

To respond to the consultation, please access the survey on the LEP’s website: humberlep.org/industrialstrategy

Alternatively, you can email comments and/or documents to [email protected]. Please include “industrial strategy” in the subject line.

The deadline for responses is 31 July. Consultation questions 1. Have we identified the right focus for the Humber industrial strategy?

2. Is decarbonisation the Humber’s biggest challenge and opportunity?

3. What is the most important thing our industrial strategy should focus upon?

4. Are the sectors outlined in the prospectus the ones that will drive our future prosperity, and have we correctly identified their strengths and opportunities?

5. Do you agree that we should focus our industrial strategy on the key sectors that differentiate the Humber from other places?

6. Are the Humber’s economic challenges and opportunities clear? Have we missed anything?

7. What assets or capabilities do you think are important to the Humber’s economic competitiveness?

8. How can we ensure all residents can access opportunities?

9. What support do you think is needed to grow the Humber economy?

10. How could we increase innovation in the Humber?

11. What practical steps are required to better support businesses in the Humber?

12. How could you, or your organisation, contribute to delivering an ambitious Humber industrial strategy?

13. Is there anything else you would like to tell us about the development of the Humber industrial strategy?