Growth – the good, the bad and the ugly …

“Owl asks: Who is “growth” FOR? Developers definitely, privatised company bosses too – but ‘the workers’ – hhmmmm.”

COMMENT

Devon workers rank among the lowest paid in UK. We are an acute example of what is a general national economic malaise.

For decades Britain has had a big productivity gap compared to our rivals; it’s a result of low pay, inadequate training, and endemic short-termism in investment. It is aided by a “flexible” labour market. Why take risks investing in plant and machinery when you can hire and fire staff easily and still make a profit? Unless we break out of this culture we will continue to have a low paid economy, poor productivity and economic growth. A decade on from the banking crisis, wages haven’t reached pre-recession levels. George Osbourne’s austerity continues.

Heart of the South West, our Local Enterprise Partnership, has set wild targets to raise productivity and double growth by 2038; but don’t have too much faith in an organisation so out of touch with the reality of austerity that in 2017 it secretly voted its Chief Executive a 26% rise.

The flipside is that we have high levels of employment. This may have been a benefit during the depths of the recession but not now.

East Devon Conservatives in their local election manifestos claim they are delivering an economy that works for all and will deliver 10,000 new jobs. Doesn’t sound to me as if they are in touch with reality and addressing the fundamental problems either. With low pay, compared with the rest of the UK, the locally employed will always be out-bid for a house by those relocating from more affluent parts. Net inward migration to East Devon, from outside Devon, was 12,400 over the ten years to 2016.

The reality is that we have full employment and an ageing population in which the proportion of those of employment age will only grow at about 0.16% p.a. This results in a need of only around 230 jobs/year, including expected inward migration. For years EDDC Conservatives have been fixated on pushing job targets and using this to justify housing development well beyond what is actually needed. For example, in formulating the “Jobs-led Policy on” strategy for the 2013 Local Plan a target of 950 jobs/year was used to justify building a minimum of 17,100 houses over 18 years. Currently job creation is running at around 260/year. Where does the 10,000 new jobs target come from and who needs the 17,100 houses? It is not difficult to guess who benefits from this policy, but it certainly isn’t a policy that works for all of us.

Have Conservatives finally lost the plot on economic management as well?”

“Growth”: 40% of jobs in East Devon could be lost to automation

Owl says: many people are only one robot away from Universal Credit …

“You could soon be replaced by a robot as data reveals two out of every five jobs in East Devon could be lost to automation.

The data, measured in 2017 by the Office for National Statistics (ONS), shows that 42,000 jobs in the area could be partially or totally replaced by machines over the coming years.

This equates to 44 per cent of occupations and of them, 9% of them are at high risk meaning they have a more than 70% chance of being replaced by machines.

The threat was medium for a further 60 per cent of jobs as the chances of automation are between 30 and 70 per cent.

East Devon was less vulnerable to the impact of automation in 2017 than six years earlier when 49 per cent of jobs were at risk of being replaced by machines.

The ONS analysed the jobs of 20 million people across England in 2017 and found that 7.4 per cent were at high risk of being replaced.

70 per cent of the roles at high risk of automation are currently held by women.

People aged 20 to 24 years old are most likely to be at risk of having their job replaced and low-skilled occupations, like waiting or shelf stacking, face the highest risk.

Jobs requiring higher qualifications, such as medical practitioners and higher education teachers, are less susceptible to computerisation.

An ONS spokesperson said: “The exact reasons for the decrease in the proportion of roles at risk of automation are unclear but it is possible that automation of some jobs has already happened.

“Additionally, while the overall number of jobs has increased, the majority of these are in occupations that are at low or medium risk suggesting that the labour market may be changing to jobs that require more complex and less routine skills.”

Felicity Burch, the CBI’s director of innovation and digital, said technology is predominantly putting jobs held by women and low-skilled occupations at risk.

She said: “The picture is complicated, as ONS’s own analysis shows that some of the roles most at risk of automation saw a boost in recent years.

“Furthermore, we know that the more businesses invest in new technology, the more likely they are to create new roles.”

https://www.midweekherald.co.uk/news/east-devon-jobs-robots-1-5973184

“Heart of the South West, our Local Enterprise Partnership, gets its first school report and it’s not good”

Local David Daniel, a former senior government strategist, who has done much work on the East Devon economy, Heart of the South West Local Enterprise Partnership (HotSWLEP) statistics and forecasts and county growth figures (and presented these to EDDC and Devon County Council) has provided this analysis of the current “achievements” of HotSWLEP.

It must be recalled that HotSWLEP is sucking up vast amounts of money that in the past would have gone direct to local authorities and its board members (apart from a few councillors) have vested interests in housing development, the nuclear industry, commercial banking and Hinkley C recruitment.

Here is the report:

“As a result of the 2017 Mary Ney review of Local Enterprise Partnership (LEP) Governance, a newly formed Joint Scrutiny Committee is to scrutinise Heart of the South West’s (HotSW) annual performance review. This will take place on

Thursday, 14 February, in County Hall at 2.15.

There will, however, be no opportunity for public engagement or speaking and this Scrutiny Committee is not politically balanced but appointed by the very councils that agreed HotSW’s strategy in the first place.

Credit where credit’s due, this is progress! Remember, HotSW was appointed by the Government to act as our “devolution body in waiting” in 2011. It didn’t publish minutes of any meetings in the public domain until 2015. Yet it had already agreed a growth deal with the Government on our behalf the year before, 2014.

It has since published wildly ambitious strategy papers culminating with its Productivity Strategy in late 2017 aimed at doubling our local economy first in 18 years, later revised to 20 years, through transformational growth in the “Golden Opportunity” economic sectors of: Aerospace; Marine; Nuclear; Data Analytics and Healthcare. Economic growth comes from increasing the labour force and/or increasing productivity.

Demographically, the population is set to grow 0.8% p.a. but it is an ageing one and the growth of those of employable age will only be a fifth of this at 0.16% p.a. HotSW intends to “limit growth” in employment to 0.8% per annum and concentrate on raising productivity way above the national average. But even this “limited” growth in employment is five times the trend and will need substantial inward migration.

When this strategy was written, productivity in the HotSW area ranked 7th worst in England. An Office of National Statistics (ONS) report last week said: “The lowest labour productivity in 2016 was in Cornwall and Isles of Scilly. Other largely rural LEPs with relatively low labour productivity included Heart of the South West, Greater Lincolnshire, and The Marches”. The ONS now places HotSW lower at 4th worst, 18% below UK average.

We now have the opportunity to lift the lid and peer into how successful HotSW has been in meeting the targets it agreed, by reading the HotSW annual performance review for 2017, commissioned from Ash Futures.

Investment

HotSW has secured a total of some £245M to date from central government funds, though, when assessed on a per head basis, HoSW has actually received one of the lower allocations across the LEP network. These funds are supposed to be matched by funding from other sources.

LEPs have to be business-chaired and business-led and it was intended that LEPs would unlock private investment. However, the bulk of this matched funding is forecast to come from public bodies including 17% from local authorities. Only 23% will come from the private sector. In regard to this the report says: “Our consultations have also highlighted that the strategic plan is not perceived as having had any significant influence over private sector investment plans.”

Only seven of the 56 funded projects are yet complete in spending terms and so the bulk of the benefits are yet to come. Though this needs to be read in the context of a continuous stream of past funding previously distributed through Regional Development Agencies.

Of these projects, 30 are designed to create conditions for growth e.g. transport and digital infrastructure; 17 are designed to capitalise on distinctive assets in expected high growth sectors such as low-carbon and nuclear energy, marine, big data and photonics; and seven on maximising productivity and growth such as opening up employment space.

Several stakeholders feel that rural areas have been ‘overlooked’ by LEP investments and much of this due to this original identification of urban-based transformational opportunities. However, this should not come as a surprise given the composition of the original HotSW board which was dominated by individuals from a construction/development; defence/nuclear or big education background.

Here are some examples of the sort of projects submitted in the bid proposals:

£13 million to provide Hinkley C infrastructure and £55 million of pump priming to provide Hinkley housing;

a Nuclear Training College;

and one of the deals agreed includes £13.7 million loan funding to three developers to accelerate home building at: Frome, Brixham, Exeter and Highbridge. (You may ask why developers need such funding).

Much is made of the “Golden Opportunity” offered by Hinkley C. This is not the first nuclear power station to be built on the site. Hinkley A was constructed between 1957 and 1965 and Hinkley B between 1967 and 1976. So there should be plenty of historical evidence of the short and long-term economic benefits of such developments. Where are they or are they too insignificant to be found? It is no longer obvious that this is a growth industry.

Economic Measures and Growth

Lack of progress in making any significant changes to our economy are best illustrated by two direct quotes from the review:

“…….the review of economic data leads to the overall conclusion that the HoSW economy, at best, continues to track the ‘baseline’ growth scenario. That is, there is no firm evidence that it is achieving either ‘strong’ or ‘transformational’ growth as aspired to in the Strategic Economic Plan.” [Baseline – continuing to fall behind UK average; Strong – keeping pace with UK average; Transformational – faster than UK average]

“The plan outcome measures and objectives in the current economic environment do not currently look achievable, certainly in the short-term. Some of this is outside of the LEP partnership’s control (with more muted conditions nationally). However, the fact that many of the Strategic Plan outcome measures are expressed in relative terms does means that even if significant absolute improvements have been made to the HoSW economy, they may still never meet their outcome measures given that other areas will grow more quickly, notably London and South East. It is our view that some of the outcome targets, particularly those associated with the ‘transformational’ target, now look very aspirational in their nature.”

The only areas on track appear to be in the delivery of broadband coverage and in housing development density (development rates against existing stock).

Conclusion

For an unelected body that made a pitch to Government eight years ago that it could transform the local economy, including, initially, delivering health and transport, this below average performance from unlocking investment to falling productivity surely can only be seen as a failure?

The review catalogues the “critical issues” (excuses) for shortfalls: the economic context has changed; the expected ‘freedom and flexibilities’ have subsequently been rolled-back by Government; parameters [strings] have been tied around what could be funded; HoSW is a relatively new ‘construct’ and does not naturally represent a functional economic, or political, area as found elsewhere in the UK.

But that’s life. Any worthwhile strategic plan needs have been developed to be robust against a set of likely future scenarios. The “critical issues” listed above shouldn’t have come as surprise and the sensitivity of the plan to these sorts of “issues”, some use the term risks, should have been examined and reported. Another essential component, given the extreme uncertainty of how to improve productivity, should have been the development of a set of metrics and a feedback mechanism. So it is heartening to see that the reviewers make this recommendation:

“Currently, there is no ‘feedback loop’ back to the Strategic Investment Panel to develop its understanding of ‘what has worked well, and what not’ with investments made. Whilst we recognise that many projects are still at an early stage of development, we feel this is a missed opportunity. A better understanding of how investments have developed would lead to better long-term decision-making.”

On the basis of this review, is HotSW delivering value for money (our money)?

SOURCES:

Joint Scrutiny Agenda and Ash Futures Review reports pack:
https://democracy.devon.gov.uk/documents/g3570/Public%20reports%20pack%2014th-Feb-2019%2014.15%20Heart%20of%20the%20South%20West%20HotSW%20Local%20Enterprise%20Partnersh.pdf?T=10

Office for National Statistics latest productivity data:
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/labourproductivity/articles/regionalandsubregionalproductivityintheuk/february2018#results-for-local-enterprise-partnerships-and-city-regions

HotSW Productivity Strategy:
https://heartofswlep.co.uk/wp-content/uploads/2018/04/HeartoftheSouthWestProductivityStrategy.pdf

HotSW Strategic Economic Plan
https://heartofswlep.co.uk/wp-content/uploads/2016/09/Non-tech-summary-FINAL.pdf

LEP Growth Strategy branded “ludicrous” but still supported by (Tory) South Hams council!

Owl says: Owl has a strategy to catch twice as many mice as it catch now. The fact that there are far fewer mice, much less farmland, Owl is getting very much older and no owl has ever caught that many mice ever is immaterial – but it gives Owl “something to aim for”!

Councillors really do need to sit a test before they pretend to represent us!

“Plans to double SW productivity branded ‘ludicrous’

Plans to double the productivity of the South West by 2038 have been slammed as “ludicrous and a fairytale”.

The Heart of the South West Joint Committee has a vision for the whole of the region to become more prosperous, for people to have a better quality of life and to create a more vibrant economy where the benefits can be shared by everyone.

The productivity strategy says: “Our ambition is simple – to double the size of the economy over 20 years. We have ambitious local plans that outline needs and opportunities for housing and economic growth. To accelerate our progress towards our ambition and vision, improving productivity is our collective focus.”

South Hams District Council’s executive were noting the progress report they made since it was established in March.

Cllr Julian Brazil questioned how realistic and achievable the plans to double the economy in the next 20 years really were.

He said: “We haven’t seen that kind of growth in my lifetime. It is ludicrous and rubbish, and if they follow these fairytale and fictitious views about the economy, it doesn’t give it any credence. They should be much more realistic and things like this doesn’t give me any confidence they will come up with anything of any use.”

Cllr John Tucker leader of South Hams, said it was a stretch target but gave the LEP something to aim for.

And Cllr Trevor Pennington said the economy has grown over the years and there is more employment than there has ever been.

The executive unanimously noted the progress report, agreed to delegate development and endorsement of the HotSW Local Industrial Strategy (LIS) to the HotSW Joint Committee, and said it had made a £1,400 annual budgetary provision for it.”

Source: Western Morning News

“Flybe ‘up for sale’ weeks after profit warning”

“Flybe is reported to have put itself up for sale less than a month after issuing a dramatic profit warning.

The regional airline is expected to say on Wednesday that its board is exploring a sale or a merger with a rival, according to Sky News.
Last month, the airline warned full-year losses would reach £22m due to a combination of falling consumer demand, a weaker pound and higher fuel costs.

The airline’s shares have fallen by almost 75% since September.

The Exeter-based airline is now valued at around £25m, far below the £215m it was valued at when it floated on the stock exchange in 2010.

Stobart Group – which pulled out of a bid to buy Flybe earlier this year after the airline rejected its offer – could be a possible purchaser, according to Sky.

Flybe, whose roots date back to 1979, has 78 planes operating from smaller airports such as London City, Southampton and Norwich to destinations in the UK and Europe.

It serves around eight million passengers a year, but has been struggling to recover from a costly IT overhaul and has been trying to reduce costs.
Last month, Flybe’s chief executive Christine Ourmieres-Widener said it was reviewing “further capacity and cost-saving measures”.

“Stronger cost discipline is starting to have a positive impact across the business, but we aim to do more in the coming months, particularly against the headwinds of currency and fuel costs,” she said at the time.

The airline is due to issue its interim results on Wednesday. The company declined to comment on the sale reports.”

https://www.bbc.co.uk/news/business-46203183

Local Enterprise Partnership – Partnership: Arise Wessex! Or maybe not …!

Below is a comment on an earlier post:
https://eastdevonwatch.org/2018/09/16/greater-south-west-local-enterprise-partnership-partnership/

reprinted here as it raises some interesting questions, raised by David Daniel, who so eloquently spoke about the unrealistic expectations of our LEPs growth strategy to a largely uninformed and disinterested majority of Conservative councillors at DCC recently:
https://eastdevonwatch.org/2017/11/30/watch-eda-councillor-shaw-and-budleigh-resident-david-daniel-make-most-sense-on-lep-strategy/

This now seems to be the THIRD such trial marriage of various south-west LEPs. None of them seem to be made in heaven ……….

“WESSEX here we come!

English devolution is a mess, whether it will evolve into anything sensible is uncertain.

A third of people living in England outside London live in one of England’s nine combined authorities, six being cities with directly elected mayors. These are corporate bodies formed of two or more local government areas to enable decision-making across boundaries on issues that extend beyond the interests of any one individual local authority, like strategic transport planning.

Our nearest is the West of England Combined Authority of: Bristol; North Somerset; Bath and North East Somerset; and South Gloucester. The Government has encouraged the creation of these structures in order to provide the economic scale needed for devolution. These are on the fast track.

County identities are medieval in origin but they continue to lurk in our consciences. We identify with them democratically and historically. The focus of the Coalition 2010 white paper that set devolution in progress was to create administrations based on economic functional areas rather than regions. This has set in train a conflict between perceived economic necessity and community identity and democracy. A few Local Enterprise Partnerships (LEPs) followed county boundaries eg Cornwall and Scilly, and Dorset, but most did not. Some even overlapped.

Following on from the combined authorities, which are all centred on what one might describe as metropolitan areas, we are beginning to see the creation of new concepts by the combination of LEPs into “power” groupings such as the Council of the North, Midlands Engine, Oxbridge Corridor etc.

We now have the Great South West Partnership of: Heart of the South West (HotSW), Cornwall and Isles of Scilly, and Dorset LEPs. Or do we? The reason I add a question mark is because not very long ago (April to be exact) we had the Great South West Partnership comprising FOUR LEPs, including Swindon and Wiltshire “working together” to agree the next steps in implementing the recommendations of a report on Productivity. We were also told that GFirst (Gloucester) and West of England (Bristol) LEPs were also taking an active interest.

In his first interview on Somerset Live the new HotSW Chief Executive, David Ralph said “We’ve set a really big ambition about doubling the size of the economy in this area over the next 30 years.”

https://www.somersetlive.co.uk/news/somerset-news/everything-you-need-know-local-1872023

Previously the target had been to double the economy in 20 years. When I asked for clarification I was told it was a mis-speak, not a change of policy to something slightly more realistic.

So who knows where we are going?”

Stuff that “growth” – Devon, Dorset and Somerset best places to retire to!

Top 10 best places for retirement

Prudential analysed data in 55 counties in England and Wales to come up with its retirement ranking for 2016 (research lag).

West Sussex
Dorset
East Sussex
Isle of Wight
Norfolk
Devon
Worcestershire
Oxfordshire
Somerset
Shropshire

…”if you were looking to move to an area which has the highest number of similarly-aged denizens, Dorset is the place, with some 28% of the 422,000 people living in the county are aged over 65. …”

https://www.which.co.uk/news/2018/09/revealed-the-best-places-to-retire-in-england-and-wales/ – Which