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?”

Leader of large district council explains why he’s not standing as a Tory this time: party-political tribalism at its worst

“York council leader Ian Gilles is not standing for re-election on May 2. He told STEPHEN LEWIS why

IAN Gillies has never been one to mince his words. But the former policeman turned Tory leader of City of York Council has to bite his tongue to keep his frustration about the state of local politics from spilling over.

Owl says: BUT this is the kind of I dependent to be Very wary of! if there is a REAL i dependent to vote for – no brainer!

“It can be very tribal,” he says. “Very… challenging.”

We’ve met over coffee to talk about his reasons for deciding not to stand in next month’s council elections: a decision which means that, from May 2, he won’t even be a city councillor, let alone council leader.

He took over as leader of a fractious Tory/ Liberal Democrat ruling coalition early last year, when previous Tory council leader David Carr sensationally quit the Conservative Party, accusing some within the council’s Conservative group of committing an ‘act of betrayal’ against him.

Cllr Carr is one of a number of former Tory councillors who will be standing as an independent on May 2. But it’s not exactly all sweetness and light in the city’s other political parties, either. Former Labour and Liberal Democrat councillors will also be standing as independents this time around.

Cllr Gillies, a former Conservative group leader and one-time Lord Mayor, was clearly seen as a safe pair of hands when he took over as head of the Tory group and as council leader last year.

But, while he insists he’s perfectly willing to try to work with members of other political groups in the interests of getting things done, he admits it has been hard work.

“The Liberal Democrats are not natural bedfellows for us,” he says. “And the situation in my own group has been very challenging.”

He says that when he took over as group and council leader last year, he intimated to other group members that it would only be until the next election.

But it is clear his frustrations run deep.

A couple of years ago he even thought of setting up a new centrist party in York, so as to escape some of the traditional party tribalism and infighting. It would have been effectively a collection of independents – none of them ‘extremists’ – whose viewpoints were similar enough for them to work together to get things through, he says.

That never happened, and he ended up leading the Tory group again and becoming council leader.

But he has begun to seriously question whether party politics should have a place in local government.

“Do we really need political parties in local government? No. I’m a Conservative: that’s what I am. But as far as this city is concerned, what matters is what is best for the city. Whipped party politics (ie a system where councillors have to obey their party line) isn’t really necessary in a local environment.”

What you need, he says, is intelligent, able people from all kinds of backgrounds who are willing to work together to get things done. “Is that Utopian? I don’t see why. You’d still have debates and arguments. But it wouldn’t be so tribal.”

Party politics isn’t the only thing that has frustrated him to the point of persuading him not to stand again, however.

The glacial pace of the move towards Yorkshire devolution has also got to him.

He places the blame for that squarely at the feet of Whitehall.

Sheffield has gone its own merry way. But council leaders in Leeds, Bradford, North Yorkshire and York all want to have a single tier of government for Yorkshire, with an elected mayor at its head, he says.

That would mean more money for the region – and more powers for regional decision-making on things such as transport. Yorkshire could become a real financial powerhouse. “I want that for Yorkshire and for York,” he says.

A proposal for such such a devolved regional government is now sitting with the Treasury. But the government has been slow to respond, and keeps drip-feeding suggestions that it would prefer smaller devolved authorities, such as one for West Yorkshire and one for York and North Yorkshire, he says.

He believes there’s only one reason for that. A regional government made up of West Yorkshire, North Yorkshire, York and Humberside combined would have a population bigger than Scotland, he points out. “I think the government is scared of the size of Yorkshire.” …

And what about the prospects for York Conservatives at the election?

He chooses his words carefully. “I don’t want to decry them,” he says. “But I think there will be a lot of people who won’t vote in the local elections.” Who knows? in other words.

His own part in local politics is over, at least for now. And once he ceases to be a councillor and council leader, he will also give up his place on various other local and regional bodies – as a director of the York BID, for example, and as vice-chair of Transport for the North. But he’s not ruling out a return to public life altogether. …”

https://www.yorkpress.co.uk/news/17580657.do-we-really-need-political-parties-in-local-government-outgoing-council-leader-ian-gillies-speaks-out/

“MPs are set to review the government’s plans for Britain’s energy sector after a string of major projects were abandoned by international companies”

Owl says: Such a shame that our Local Enterprise Partnership – dominated by people with a vested interest in the nuclear industry – has put all our growth and regional investment eggs in the Hinkley C basket!

MPs are set to review the government’s plans for Britain’s energy sector after a string of major projects were abandoned by international companies.

The Business, Energy, and Industrial Strategy Committee said it would look into the government’s plans to see if they are fit for purpose.

It will examine if the country needs a new approach to speed up investment into low-carbon, low-cost energy and secure supplies in the long term.

The decision comes after Japanese firms Hitachi and Toshiba pulled out of the Wylfa and Moorside nuclear projects, dealing a serious blow to the government’s plans.

The committee also said it will investigate concerns over foreign investors in British nuclear. This comes amid worries about Chinese involvement in major projects.

Committee chair Rachel Reeves said: “In the wake of investment decisions over nuclear plants at sites such as Moorside and Wylfa, a giant hole has developed in UK energy policy. With coal due to go off-line, and the prospects for nuclear looking unclear, the government needs to set out how it will create the right framework to encourage the investment needed to plug the gap.

“In this inquiry, we want to examine the government’s approach to creating the right conditions for investment to deliver the secure energy capacity to meet the nation’s needs. A bigger shift in our energy infrastructure to a low cost, low carbon energy system is necessary.

“As a committee, we will want to consider what more the government needs to do to attract greater investment into financing future energy capacity, including renewables.”

http://www.cityam.com/273977/mps-launch-inquiry-into-government-energy-policy-after

“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

Nuclear options?

“Nuclear power plants divide opinion. But on one thing everyone agrees: it’s nice if they’re welded together properly.

EDF still can’t convince France’s nuclear regulator that it can do it at Flamanville: the €10.9 billion nuke that’s years late and oodles over budget.

Still, not to worry. It’s only the prototype for Hinkley Point C.”

Source:
http://www.thetimes.co.uk
Business Commentary – Alistair Osbourne

Yes, all is well.

We know this because our Local Enterprise Partnership is still pumping oodles of Devon’s money into it – and coincidentally into their own pockets too!

So what does it matter if we don’t get it? The multi-billion pound “investment” will have helped a handful of people along the way and we will have had an invaluable (literally) experience!

Greendale owner 30th most influential Devonian

Our old friend Karime Hassan (CEO Exeter City Council) is in 19th place, Steve Hindley (Chair,Local Enterprise Partnership) is 18th, Alison Hernandez (Police and Crime Commissioner) in 12th place, John Varley (CEO, Clinton Devon Estates) in 9th place, with Devon County Council’s CEO Phil Norey in 2nd place and DCC Leader John Hart in first place.

“30. Rowan Carter, Director Greendale Group

The company behind the Greendale Farm Shop and Waterdance fishing fleet, incorporates a diverse range of businesses. From its beginning as a farming enterprise set up by the Carter family more than 150 years ago, the group includes the farm shop, Waterdance Fishing, Greendale Living, Greendale Business Park, Greendale Haulage, Exmouth Marina and Greendale Leisure. Last year, the Carter family unveiled major expansion plans for the Greendale Farm Shop to create 30 jobs and provide ‘significant benefits’ to East Devon.

The family has also made a £5million commission of two new fishing boats, including the largest beam trawler to be launched under the British flag in over 20 years. The company also wants to build more agricultural buildings and intends to acquire more farmland in order to expand its farming business.”

https://www.devonlive.com/news/business/50-most-powerful-people-devon-2450702

Hitachi suspends Wales nuclear plant – what is the business case for Hinkley C

Hinkley C is leaking out money from Devon via the Heart of the South West Local Enterprise Partnership, whose board (past and present) includes people with direct and tangential interests in the nuclear industry and that particular site.

Now we hear that Hitachi is suspending work on the nuclear plant it was meant to build in Wales. It is prepared to take a hit of more than £4 billion to walk away.

It begs questions:

How can the French (EDF) and Chinese – who now own Hinkley C – make a business case for Hinkley C even with the massive subsidy for its (eventual) electricity?

Just how much of OUR money is propping up these French and Chinese businesses?

What is the Plan B if one or both of the companies fail; how much of OUR money will be used to plug financial holes?

What effect has this had on renewable energy sources in Devon and Cornwall?

How much more money is our LEP going to divert to this project?