Speech to the Westminster Social Policy Forum

The following text is a speech given by Cornwall and Isles of Scilly LEP Chair Mark Duddridge to the Westminster Social Policy Forum on 10 March at a seminar on Local Enterprise Partnerships and regional growth.

'Levelling up’ is not a new concept for Cornwall and the Isles of Scilly and we are on a long journey to close the large productivity gap with the UK as a whole, and support those neighbourhoods which continue to show the symptoms of that low productivity: low wages, poor health, deprivation, and low aspiration.

In Cornwall and the Isles of Scilly we have 17 neighbourhoods in the top 10% of most deprived areas in England, according to the Index of Multiple Deprivation.

It shows that out of the 38 Local Enterprise Partnership (LEP) areas in England, Cornwall & Isles of Scilly ranks as the eighth most deprived.

The rest of the top 10 are all North of Birmingham, so it’s not hard to see why commentators use the north/south divide as shorthand for an economically divided Country. But it’s not helpful for an area like Cornwall with persistent, demonstrable, social and economic needs.

That’s why our Local Industrial Strategy is so important to us. It represents a clear opportunity to evaluate what’s worked in the past, what hasn’t worked and where market opportunities exist to build on our unique regional strengths.  It’s a chance to do things differently and our LEP, backed by the wider private sector, has embraced the opportunity to put forward a different approach which is captured in our vision.

In Cornwall and the Isles of Scilly we’ve always understood that everything is shaped by our environment, whether that is the wealth of resources under our feet, or the natural forces that have sculpted the peninsula and our islands and which we are now harnessing for renewable technologies.

We plan to measure the success of this strategy differently. The relentless pursuit of GDP has led us to the brink of climate catastrophe without enriching our poorest communities or closing the prosperity gap. So, we will set a different course and measure environmental growth, renewable energy production, quality of life and wellbeing, and take a more rounded view of prosperity. Carbon neutrality is fundamental to this vision.

But it’s not all doom and gloom and progress has been made. Our economy has grown by over £5bn (in terms of GVA) over the past 20 years. There are 53 thousand more jobs. Over 30% of our energy needs are produced by renewables. We have built, from scratch, a unique University campus and research partnership that combines the research expertise of the University of Exeter, the creative spirit of Falmouth University and the applied science of Plymouth University. This will be vital in delivering on the unique opportunities set out in our emerging Local Industrial Strategy, which embraces clean energy, geo-resources, data and space, agri-food and tourism.

Some of these economic priorities will be familiar to people and are clearly part of the Cornish brand, in particular agri-food and tourism. But our focus is very specific. In terms of tourism, for example, we want to be a leader in sustainable tourism.

Our interest in agri-food is very much about how we adapt to a post EU farming framework and increase the quality and value of Cornish agriculture and food production with a focus on the environment and productivity.

What people may not be so familiar with is some of the other unique regional strengths that we have and I want to take a moment to talk about data and space, and geo-resources.

Firstly, Data and space.

As a region we are well placed to take a leading role in the new ‘space race’ which is driven by the commercial demand for the launch of smaller and more powerful satellites, which support the ever growing market for communications, big data and earth observation. As a LEP we’ve already invested over £8m in the future of Goonhilly Earth Station and have worked closely with Cornwall Council and the UK Space Agency to secure Virgin Orbit as an operator of the UK’s first horizontal launch spaceport in Newquay.

Our aim is to use the assets we have to not only drive the launch sector, but also the supply chain and downstream applications of satellite derived data.

This sector has seen a 164% growth rate in Cornwall since 2010, with employee numbers in the sector rising by 234% during that time. Goonhilly Earth Station has employed 100, new, full time staff and average salaries in the sector are over twice the Cornish average.

And then there are geo-resources. In Cornwall we are taking a fresh look at the resources beneath our feet. In the last 12 months we’ve seen Geothermal Engineering Limited drill a 5,000 metre deep well to use geothermal heat to power a 3MW energy plant. Another drill is due to start at the Eden Project this year.

But I also want to talk about Lithium, the metal of the future. Lithium was first discovered in Cornwall in the 1860’s but now global demand for technology metals such as tin, copper and lithium has opened up a potential global market for companies, like Cornish Lithium, to exploit.

The use of modern digital computer technology has enabled the company to combine large historical datasets with satellite and other geophysical data to allow the reinterpretation of mineral potential in the light of modern extraction technologies. A secure domestic supply of such metals is considered vital to the industrial strategy of the UK as it moves towards the production of electric vehicles. And the potential global market - £70bn - for both the metal and the research capability to acquire it, is huge.

Both of these sectors (space and geo-resources) are examples of how we are using our Local Industrial Strategy to match regional assets to global markets to drive productivity. But productivity has to have a purpose and ours is inclusive growth.

We need to improve skills, increase opportunity and raise aspiration by investing in our people and the infrastructure required to allow them to develop higher paid careers, in Cornwall. We don’t have an unemployment problem in Cornwall but we do have a poverty problem caused by the legacy of post-industrial decline and low pay sectors exacerbated by high housing costs.

Increasingly, we are looking to deliver our Local Industrial Strategy through a focus on priority places. For example, those towns dealing with the worst impacts of a retail sector in decline, or those already challenged by high levels of deprivation.

In Cornwall and Scilly we’ve had large amounts of EU programme investment and while we’ve done many brilliant things, we’ve not yet significantly impacted on all of those estates, neighbourhoods and communities who have been most left behind.

But neither has the UK closed that gap, and the level of regional disparity within the UK is one of the biggest in Europe.

This is driven both by the extraordinary levels of growth in London and the South East and exacerbated by a lack of investment in rural and peripheral areas across the country. Not only that, but the lack of meaningful devolution is also a factor in slowing down investment and making regions less agile.

We face a huge challenge of levelling-up the regions and areas of the UK where productivity is persistently low and deprivation is stubbornly holding back communities. And what’s more, regional inequality in the UK is growing. The OECD singles out the UK as the most centralised country in the Western world, while the UK2070 Commission and OECD point to regional inequality in the UK being significantly larger than comparative countries.

This centralisation simply hasn’t worked.

Regional inequality in the UK is a more complex issue than a simple north/south divide. The immense productivity gap that currently exists between the prosperous South East of England on the one hand and the rest of the country on the other must be levelled-up by investing in the LEP areas and regions that are currently lagging behind through the UK Shared Prosperity Fund (SPF).

The future prosperity of the UK depends on unlocking the potential of all its regions. The key to this is devolution. That is why Cornwall and the Isles of Scilly have put forward a proposal for a delivery model for how a fully developed Shared Prosperity Fund could operate in our area. We are asking for a £700 million investment over 10 years devolved to us as a single pot with local decision-making and accountability at the heart of this model.

In developing a CIoS delivery model we are making a clear offer to the UK government and outlining a strong vision for the future of our region.

Our commitment is that a £700m Cornwall and Isles of Scilly SPF programme will leverage £345m additional private and public sector co-funding over the 10 year delivery period.

In order for our delivery model to succeed for the people of Cornwall and the Isles of Scilly we also have some concrete asks of the Government.

We want to see a strong UK regional policy with the aim of rebalancing the UK economy at its heart. We want a fair and transparent national allocation mechanism for the UK SPF that is based on need as well as opportunity.  Furthermore, the UK SPF must be a dedicated fund designed to address regional inequalities rather than a re-badging of other Government funding.

We want government to come through on its promises that Cornwall and Isles of Scilly won’t be worse off because of Brexit. For us this means a single pot of £100 million a year devolved to our area. We are asking for a locally driven and locally accountable SPF with strategic and delivery control of the SPF programme fully devolved to us locally.

We want to see a simplified compliance, audit and state aid regime as this will enable the UK SPF to be less bureaucratic and cheaper to administer.

Having studied previous programmes in detail we think we can deliver more, quicker, with a clear Local Industrial Strategy, backed by a devolved Shared Prosperity Fund.

In Cornwall and Isles of Scilly we have learned many lessons from more than 20 years of implementing EU programmes. Both what works and what doesn’t.

Our proposed delivery model is based on three key principles.

Firstly, we are committed to an efficient programme design phase and a SPF programme up and running within a year. Past EU programmes have been slow in getting out of the starting blocks. It took three years to make the first EU investment in the last programme. We will have a local SPF programme up and running within one year.

Secondly, we are committed to measuring what matters, not what is easy to count. We will monitor delivery against our Local Industrial Strategy and adopt KPIs that focuses investment and project behaviour on desired outcomes, rather than simplistic outputs.

Lastly, we are keen to put in place a responsive model which applies a flexible approach to delivery. We would have ‘open calls’ for projects and direct commissioning alongside national partners. Loans, grants, equity and community led development should all be in the mix.

But to do all that we need the government to back up its levelling up rhetoric with both investment and regional devolution.

Hopefully, we will see the beginning of that commitment in tomorrow’s budget….