Friday, 17 March 2017

The Swansea Bay City Deal: Conclusion

The city deal presents a unique opportunity to bring investment into the Swansea Bay region. It will take a massive amount of organisation - I hope that our local authorities will be able to deliver. If the project delivers good quality employment for locals and somehow finds a way to retain and reinvest financial and intellectual capital locally it will be a success. Anything else will simply be another piecemeal regeneration project will no real long-term benefit.

Thursday, 16 March 2017

The Swansea Bay City Deal: Opportunities

The city deal is a hugely complicated project that will require a lot of work by officials to make it a success. There are a long list of concerns, although who would expect any differently from such a multifaceted proposal.

Truthfully, the levels of investment in the region are phenomenal and are potentially transformational. As the world transitions away from industry because of automation, the economy is moving towards being a knowledge or a smart economy. Success in the future will be about developing the next big idea, turning it into a useful product or service and marketing it as such. It is clear to me that this is exactly what the project team have in mind. I can see that the city deal proposal has also benefitted from the input of the private sector. The involvement of multinational firms such as Fujitsu and Cisco show that the proposals are built on strong foundations. If the city region can be made a success, it could trigger a new industrial revolution in out bit of South West Wales. It is focussed on the future, unlike the Cardiff deal which to me feels slightly lost in the present.

The greatest achievement of the deal so far is the scale of its ambition. Negativity breeds negativity and positivity breeds positivity. Positivity is a quality that is often lacking in the Welsh national psyche, particularly when it comes to industry and economics. Decline bread decline. If the concept is accepted by the population, it will help trigger a new wave of positivity and confidence in our not-so-little part of Wales. It's easy to be a cynic because you have nothing to lose. It's tough being an optimist because you can suffer disappointments along the way. It will be a bumpy road and there will be disappointments. There is a chance that some projects will fail. But some of them will succeed. 

This is Part 4 in a series of posts about the proposed Swansea Bay City Region Deal. Part 5 will conclude this series.

Wednesday, 15 March 2017

The Swansea Bay City Deal: Concerns

As a good cynic, I will start by looking at some of the concerns I have with the city region deal as currently proposed.

The deal will bring together a significant amount of public sector investment, but it will also involve massive amounts of private sector investment - £673m according to the proposals. This represents a huge amount of money and I'm not entirely sure how this will be delivered at the moment. Businesses will need to see something very special in the Swansea Bay region to make the kind of investments we are talking about. However, early indications suggest that there is a lot of private sector interest in some of the projects. In Carmarthenshire, officials have stated their surprise at the amount interest in the Life Sciences and Wellness Centre in Llanelli. However, showing an interest and investing hard cash represent very different levels of commitment. Already, we have seen that not all projects are going to plan. Yr Egin, which is at an advanced stage came into trouble in November 2016 when it was revealed that the lead partner on the project (University of Wales Trinity St David) took their begging bowl to the Welsh Government for a grant of between £4 and £6million for the project. They have now been offered £3million by Economy Secretary Ken Scates and picked-up a good reputational bruising along the way.

If the private investment comes through I am sure that the project team's figures on job creation will be reasonably accurate. However, will this mean more jobs for local people, or will it mean skilled people moving into the area to take up these new jobs? Any new jobs must benefit local people. Furthermore, this should mean that the new skilled jobs should benefit local people. The skills project will be vital to the success of the scheme in the hearts and minds of local people.

There are also questions as to how local businesses will benefit from the city region deal. There are many excellent local businesses who create amazing products and provide innovative services. I asked Prof. Marc Clement, the Dean of Swansea Business School and Swansea University's lead on the city region board how local businesses can feed into the city region concept. There was some acknowledgement, I believe, that there will need to be a lot of work done to promote the city region concept with local businesses and to encourage them to get involved.

Capital is at the heart of all our problems in South West Wales. How do raise and retain capital? Any capital that is currently invested in local businesses and developments (other than that from the public sector) is cash that has, more often than not, come from outside the area. What that essentially means is that any return (i.e. profit) that is gained from this investment is then taken out of the area again either to the private investor or the members of the pension or investment funds. This really comes down to the heart of the problem in Wales (and any relatively poor area). The owners of the vast majority of private capital invested do not have a real vested interest in the area. They place cash into low-risk projects with an expectation that the capital will get a reasonable return.

The problem is even worse for intellectual property. Small and medium-sized companies that succeed around here because of their ideas are often bought out by larger companies. These larger companies have no real interest in keeping the acquired business or investing in Wales and will just strip it of its assets, which will in most cases be just the intellectual property. Over the long-term, no economic development strategy will overcome the economic decline of the area unless we are able to start building and maintaining significant amounts of capital in the region and find a way to protect and keep the ownership of intellectual property locally.

Some of the projects lack any real clarity as to their purpose or how they will develop. The Life Sciences and Wellbeing Centre in Llanelli is the best example of this. Over the 15 year lifetime of the development of the project, it will involve an extraordinary investment in the town - the greatest since the end of the industrial age. There as lots of uses of the terms wellness, wellbeing, innovation, caring of older people etc. but little real clarity over how it will develop. It is also part of the wider ARCH project which, while separate from the city region deal, is again as clear as mud. To quote their website, ARCH is
What is ARCH? We should view ARCH as the wave on which we can all ride to help us achieve success - faster, and together
Innovation and collaboration are they key foundations of our mission statement. ARCH brings together industry, innovation, academic research and the health sector
ARCH is a philosophy, an ethos. A community of like-minded partners who share the same pioneering aspirations, innovative spirit and can-do attitude to improve human health and wealth
To put it crudely, if it looks like BS and smells like BS, then it probably is BS. The people behind these projects really need to explain exactly what they will mean in clear English.

The ARCH project team won't be getting one of these anytime soon
Transport is not mentioned once in the heads-of-terms agreement of city region deal. I'm very disappointed by this. Anyone who has tried to travel from Kidwelly to Fabian Way during the day will tell you how god-awful it is to travel across the Swansea Bay area. No integrated region will succeed unless there is good quality public transport available to underpin it. Looking towards Cardiff, the Metro is at the heart of the city region deal. However, if the deal is agreed and a new board is established to deliver it, it is likely that they will be given powers over public transport in time, possibly in the form of a regional transport authority. But to develop a functional public transport infrastructure in an area that has very little and takes in vast rural areas will require billions of pounds - amounts that will make the original city deal look like peanuts. I think it is fair to say that the project team has not focussed on transport because it is not one of the region's strengths. However, it the deal succeeds and jobs are created, people will need an easy way to travel to their new jobs that does not involve the M4 motorway.

The governance arrangements are a bit confusing and will be sitting on top of a multitude of public bodies that already exist to serve the locality. The 'sovereign' body will be a joint committee of each local authority and will have sub-committees that will manage specific projects and policies. Spending public money will have to be agreed by this joint committee. There will be a wider body made up of local government, business, academic, trade unions and other interested parties that will focus more on policy and advice. Over the medium-term, there will be a need for the structure to be clarified and be made more sensible in reference to existing local government bodies, particularly if there will be further bodies being added such as a regional transport authority. In England, city mayors have been an answer, but I don't detect any appetite for a democratic solution in Wales.

This is Part 3 in a series of posts about the proposed Swansea Bay City Region Deal. Part 4 will consider the potential opportunities of the proposals.

Tuesday, 14 March 2017

The Swansea Bay City Deal: The Projects

The growth in the city deal's four main sectors will be delivered through eleven initial projects;
  • Digital Infrastructure - Gigabit fibre, 4G, 5G and Wi-Fi - Total Project Value of £55m
  • Swansea City and Waterfront Digital District - incubation space and co-working areas for start-ups and small businesses, alongside global enterprise; a new City Centre Business District and a Digital Square and Arena - Total Project Value of £168.2m
  • Creative Digital Cluster, Yr Egin, Carmarthen - a digital and creative industry cluster joined by S4C as the key anchor tenant and approximately 28 other digital and creative media SMEs as tenants. Will also contain business accelerator facilities, incubation, as well as shared spaces for interaction between each of the tenants, driving entrepreneurial development - Total Project Value of £24.3m
  • Centre of Excellence in Next Generation Services - provide a data analytics capability to turn world class data into commercial systems and solutions - Total Project Value of £55.5m
  • Skills and Talent initiative - ensuring that local people and businesses have the appropriate skills to benefit from each of the City Deal themes
  • Homes as Power Stations - To create a new industry based around innovative and sustainable energy generation, combined with storage and efficiency. New technologies developed will be applied within the region, allowing homes and buildings to generate, store, and release their own energy. The project will also address fuel poverty, which remains a persistent challenge for many communities across the region - Total Project Value of £517.1m
  • Pembroke Dock Marine - The project will involve the development of a marine energy test area utilising the deep port of Milford Haven, an energy engineering centre of excellence, and a wave energy demonstration zone - Total Project Value of £76.3m.
  • The Llanelli Life Science & Wellbeing Village - Aims to deliver transformational social and economic benefits through delivering the full scope of the Life Science and Wellbeing Village definition, namely the integration of business development, education, wellness initiatives, research and development and healthcare initiatives - Total Project Value of £199.5m
  • Life science & Wellbeing campus network - will build upon the successful Institute of Life Science initiative, providing a world-class integrated research & business incubator/park secondary/tertiary clinical, research and trials environment, and skills development centres - Total Project Value of £45m
Illustrative flyover of the proposed Llanelli Life Science & Wellbeing Village:

  • Factory of the Future - It will support SMEs to invest in leading edge technologies and harness the opportunities associated with the digital manufacturing revolution - Total Project Value - £23.5m
  • Steel Science - The Centre will address the current and future challenges of sustaining primary steel-making capacity in the region and the UK, building upon the region’s centres of excellence and industrial capabilities. - Total Project Value of £80m.
I have listed these projects very briefly and more information can be found in the report submitted to the county council (available here). These projects should lead to a total investment of £1.3billion in the region over 15 years. This will consist of £241m split between the UK and Welsh Governments. Some £360m of other public sector funding and £673m of private sector contributions will make up the total investment package. The city region team believe that this investment will deliver up to 9,465 new jobs for the region, contributing to an uplift in Gross Value Added (GVA) of £1.8bn, calculated using the same methods as those in the Treasury Green Book. This should contrast with the previous two decades of jobless growth in the region. 

This is Part 2 in a series of posts about the proposed Swansea Bay City Region Deal. Part 3 will consider the concerns surrounding the proposals.

Monday, 13 March 2017

The Swansea Bay City Deal: Introduction

Swansea Bay City Region Logo
On Wednesday 25 January Carmarthenshire County Council agreed to delegate authority to the Leader of the Council to sign the Swansea Bay City Region deal based on a 'Heads of Terms' document presented to the meeting. The city region proposal presents what can only be described as a very exciting vision for the future of the region, which includes Carmarthen, Pembroke, Swansea and Neath Port Talbot counties.

It's fair to say that a while ago the city deal was waning until it was picked up again by Cllr. Rob Stewart, Leader of Swansea City Council and Mark James, Chief Executive of Carmarthenshire County Council. At the moment, these two figures seem to be driving the project forward, supported by the other partner authorities. There is also a 'with Brexit, the city deal is the only game in town' attitude towards the proposal.

The Swansea Bay City Deal focuses on four main sectors for both urban and rural areas across the region;
  • digital infrastructure,
  • the energy sector,
  • smart manufacturing, and 
  • innovation in life science.
My first impression is that the city region team has chosen very strong sectors that have a huge potential for growth. If I was trying to pick industries that will grow in the future, I would choose these. They also feed into some of the strengths of the Swansea Bay area.

The deal is currently being by the UK Government. There were hopes that there would be an announcement of the deal as part of the Chancellor's Spring Budget, but many were left disappointed when the Welsh Secretary declared that

This is Part 1 in a series of posts about the proposed Swansea Bay City Region Deal. Part 2 will consider the eleven projects that will form the deal.

Saturday, 28 January 2017