“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?

Disaster for some LEP members with fingers in Wales nuclear pie

Several members of our Local Enterprise Partnership also have an interest in this nuclear power plant in Wales …..

“Hitachi set to cancel plans for £16bn nuclear power station in Wales”

… Just one new nuclear power station, EDF Energy’s Hinkley Point C in Somerset, has been given the green light and begun construction. The French company and Chinese firm CGN both want to build more.” …

https://www.theguardian.com/environment/2019/jan/11/hitachi-cancel-plans-nuclear-power-station-angelsey-wales

“UK’s nuclear plans in doubt after report Welsh plant may be axed” but too late for Hinkley C …

… which absorbs much of our regional funding via our Local Enterprise Partnership and its nuclear-benefitting business members.

Fresh doubts have been raised over prospects for the UK’s new nuclear power programme after a report that Hitachi is considering axing plans for a plant in Wales.

The Japanese conglomerate’s mooted 2.9GW nuclear power station on Anglesey is next in line in the UK’s nuclear plans after EDF Energy’s 3.2GW Hinkley Point C scheme in Somerset.

However, Japan’s TV network Asahi reported that the Wylfa Newydd scheme may be scrapped, sending Hitachi’s shares up by almost 3%, before ending up by 1%.”

https://www.theguardian.com/environment/2018/dec/10/uk-nuclear-plant-hitachi-wylfa-anglesey

Never trust a Tory with numbers!

“Mayor James Palmer admitted he underestimated the cost of running the new combined authority, and says original predictions it would cost £850,000 a year were never going to be realistic.

The Cambridgeshire and Peterborough Combined Authority was founded in 2017 in a bid to simplify local government. It is involved in many major housing and infrastructure schemes, including the proposed Cambridge metro, and the Wisbech rail link.

However, having initially been hailed as an “efficient” and low-cost authority, some are beginning to worry about rising costs and the “spiralling” cost of paying for staff.

Initially, it had been claimed the authority could be run on £850,000 a year.

Now there are fears costs are “spiralling out of control” after it emerged the authority is set to spend £5.6million on staff salaries alone this year. Total operational costs of the combined authority are set to come to £7.6million.

In leaflets distributed when Conservative James Palmer was running to be mayor of the combined authority, Mr Palmer said: “Under my leadership, the new combined authority will have very few staff, less than 20, and will be very efficient, costing around £850,000 a year to run. Most authorities cost tens of millions. As mayor, I will make sure the cost is kept low.”

Today (November 26) Lucy Nethsingha, chairwoman of the combined authority’s overview and scrutiny committee, noted that costs at the authority were “considerable higher” than had been originally expected. She asked Mr Palmer what he had to say about the increased costs.

Mr Palmer now says he “can only apologise” for the increased costs of running the authority, saying he “underestimated” its running costs.

Mr Palmer said: “I can only apologise. I underestimated the cost of running such an important authority. I think, realistically, we were never going to be able to function on £850,000 a year.”

Mr Palmer said he was concerned about costs at the authority which is why he has commissioned a review of its structure. He also pointed out that the combined authority had taken on staff and spending from the local enterprise partnership (LEP), a group which supported business and sustainable investment and growth, which was scrapped in December 2017.

Mr Palmer also noted that senior staff at the combined authority were not earning more than similarly senior staff in other tiers of local government. He said, however, that after the review is completed, he anticipates the authority will be spending less on staffing. He said he expects running costs to be reduced as the authority relies less on consultants.

“It is a difficult one, “said Mr Palmer. “It’s something the general public rightly gets concerned about. It is their money. But we are working to deliver extraordinary infrastructure and doing things that were previously not achievable.”

https://www.elystandard.co.uk/news/james-palmer-and-cost-of-combined-authority-1-5795358