Chair's Blog October 2016
When Chancellor Philip Hammond delivers his first Autumn Statement on 23 November 2016, Local Enterprise Partnerships up and down the country will learn what share of the £1.8 billion Local Growth Fund they can expect to receive for their respective areas’ Growth Deals.
This is the third round of local growth funding since July 2014. In Cornwall and the Isles of Scilly we successfully bid for £60m of investment in previous rounds and much of that is now being delivered in the shape of projects designed to unlock jobs and housing growth.
The regeneration of Bodmin, improvements to Truro’s Western corridor, upgrading of the Carkeel gateway near Saltash and road and junction improvements in Redruth are all examples of Growth Deal funded projects now underway.
Our Growth Deal 3 bid was submitted over the summer and asks for £127 million of investment. It focuses on science and innovation, people and skills, infrastructure and workspace. It would attract a further £186m of investment, half of it from the private sector.
And this isn’t wishful thinking – we have projects ready to go with confirmed match funding. Growth Deal 3 could invest in 10,000 jobs, upskill 12,000 people, help deliver 4,400 new homes and the equivalent of six premier league football pitches of quality workspace.
We won’t know until the Autumn Statement what our allocation is likely to be, but we do know that the fund is already at least three times over-subscribed. We believe our bid is strong, and the relationships we and our partners have already forged through Cornwall’s Devolution Deal with Government augurs well.
There have also been some encouraging signs about the Chancellor’s priorities. Having abandoned his predecessor’s target to balance the books by the end of this parliament he has said there is scope for greater investment to boost the economy, including extra borrowing of £2 billion to speed up the delivery of new homes.
Targeted spending on infrastructure is also on the cards as the Government seeks to counter any impact on growth and jobs caused by the uncertainty of Brexit. But while ‘big ticket’ items like HS2 or a third runway at Heathrow might grab the headlines, more modest investments in regional infrastructure are also critical and that’s part of what our latest Growth Deal bid would deliver.
There was a useful insight into Government thinking on regional growth in a recent speech by Business Secretary Greg Clark to the Institute of Directors, in which he argued that any successful industrial strategy for the UK ‘has to be local’. He even namechecked Cornwall, saying that helping us achieve our potential was as vital as helping Birmingham “but what is needed in each place is different” because “for too long government policy has treated every place as if they were identical”.
We agree with that. Our area has very specific challenges, needs and opportunities, and it’s the job of the LEP to tackle those issues and shape future investment to deliver growth in our local areas, businesses and people.
Greg Clark said the UK’s economic progress is “visibly uneven”. We agree. That’s why our region was allocated £500m of European funding between 2014 and 2020. June’s Brexit vote has created huge uncertainty about the future of that funding, but we are getting more clarity.
Over the last few months we and our partners have been working hard to ensure that we get as many EU-funded projects as possible over the line in time for the Autumn Statement following a Treasury deadline set over the summer.
And there was very welcome news in the Chancellor’s Conservative party conference speech. He has confirmed that EU-funded projects that run beyond our exit from the EU will continue to be funded as long as they “meet UK priorities and value for money criteria”.
We don’t yet know what those criteria are and we will be pressing for assurances that the process of applying for funding will not become even more complex or lengthy.
Longer term it will be up to us and our partners including Cornwall Council to negotiate a new funding relationship with Government as part of future devolution aspirations.
I will be exploring these issues in a few weeks when the LEP meets with Industry and Energy Minister Jesse Norman, who was appointed in August as the Government’s local growth champion for Cornwall and the Isles of Scilly. This is a positive move and gives us an important channel into the heart of Government. Alongside Cornwall Council, we are also expecting to meet with key Secretaries of State on the back of a series of letters sent jointly by the LEP and Council during the summer.
Among the many issues we aim to discuss with the Minister will be concerns among our business community about the potential impacts of Brexit on our region. The LEP has undertaken some qualitative research among many of our larger employers to understand better how Brexit might affect them, for better or worse. And we know many of these issues will affect business of all sizes.
You can read the full report here. What emerges as the greatest concern is the potential impact on the future availability of staff, especially in the agricultural, care and tourism sectors, and potential difficulties in recruiting skilled staff in the future. The Home Secretary’s proposals for potential new curbs on foreign workers announced at the Conservative party conference will do little to allay these concerns.
Although most businesses seem to be taking a ‘wait and see’ attitude to Brexit, an electronic poll from a recent LEP workshop with local businesses presented a mixed picture, with 39% saying they had already experienced a negative effect, 9% reporting a positive impact and 52% reporting no impact at all from June’s Leave vote.
However, 70% of the businesses taking part in the workshop did say they had or would be adjusting and updating their business plans to take account of Brexit. Concerns include future gaps in public funding in the absence of EU investment, fewer visitors to Cornwall and the Isles of Scilly, staffing issues, and potential increased costs driven by exchange rates.
The workshop was part of our recent ‘Breakfast in the Biomes’ event which was looking at how our economy should evolve over the next 15 years and beyond. Some interesting themes emerged.
When we asked our audience what they thought was the single biggest challenge facing businesses in Cornwall and the Isles of Scilly, the overwhelming response was finding and holding on to skilled staff.
Asked where they thought public investment should be spent over the next 15 years, delegates said infrastructure and upskilling the workforce were the top two priorities. Both remain a key priority for the LEP. Growth Deal investment is already tackling infrastructure issues and we are working hard to synchronise supply and demand for education and skills. You can read our recently updated employment and skills strategy here.
We also asked our workshop delegates what they thought was the best way to measure economic success. The top response was wages, followed by wellbeing. Measures such as jobs and investment were ranked much lower. The focus on wellbeing is interesting because it plays to the natural strengths of our region and reinforces the importance of health, culture and the environment to economic activity.
We are now looking at all these responses as we update the Cornwall and Isles of Scilly Strategic Economic Plan. This is the roadmap to our economic future to 2030 and beyond so it’s important we continue to engage with business and others to set priorities and make sure we achieve our ambitions for growth.
Within the next month we will share an updated version of the plan with you via our website and will welcome your comments.
Mark Duddridge, Chair
Cornwall and Isles of Scilly Local