It is almost exactly a decade since Professor Greg Clark’s “Growth and Competitiveness Commission” met. Our task was to formulate a broad strategy for implementing the recently-signed £1.2bn Cardiff Capital Region (CCR) City Deal.
We took evidence from key partners in the region – local and national government, other public sector agencies, business, education, the Future Generations Commissioner, unions, charities – before presenting our recommendations in December 2016.
Since then, the one-off, voluntary City Deal has evolved into a statutory Corporate Joint Committee (CJC) with wide-reaching responsibilities for regional economic development. As Professor Clark says here, in Part I of his “CCR at 10” review: “Ten years ago, CCR was an ambition. Today, it is an institution.”
Our South East Wales CJC is charged not just with making the regional economy bigger, but with doing so inclusively and sustainably – “Stronger, Fairer, Greener” – in pursuit of improved all-round economic well-being for its people. “CCR at 10” is being launched at a time when such inclusive “levelling up”, and most recently place-based economic development generally, has been moving up the UK national economic agenda – a reminder perhaps that pioneering, local economic initiative is not confined to a certain northern English region.
The initial City Deal funds were divided into two pools. Better transport connectivity across and around the region was a key recommendation from the Commission, and two-thirds of the funds were allocated to Transport for Wales and its South Wales Metro. CCR has been directly responsible for the remainder, most of which is now committed and disbursed in a mix of commercial and social projects.
From the initial City Deal onwards, the inclusive and environmental aspects of well-being have been as important to CCR’s approach to regional development as the conventionally economic.
Commercial viability is essential if South East Wales is to compete in an interconnected global economy, but it needs to be buttressed by commitment to those community needs which cannot be satisfied by markets alone. High value-added manufacturing creates fewer jobs – and in fewer places – than more foundational projects, and we need both segments to flourish.
Within the commercial sphere, the Wider Investment Fund has been pragmatic in its interventions. For example, a strategy of reinforcing key clusters of businesses in a handful of sectors has not prevented CCR from taking advantage of attractive opportunities elsewhere. The product cycle evolves constantly – a lesson which South East Wales has surely learned by heart.
And while we are convinced of the importance of technology and innovation, we also know that they are not confined by industrial classification – a point worth bearing in mind amidst today’s fixation with data centres and AI. Arguably the most exciting and genuinely innovative opportunities in the region may be found in the coming energy transition, where we think the Aberthaw site can play a special role.
Commercial intervention through CCR’s Wider Investment Fund has taken the form of both equity and loan finance, with a focus where possible on attracting additional private funds. Leveraging the initial taxpayer funds in this way was one of the objectives identified by the Growth Commission.
Where possible, CCR has adopted an “evergreen” approach in funding projects, aiming to recycle returned capital and interest into new investments. Meanwhile, new sources of funds have become available from the Westminster government, and CJC status brings with it the possibility, in due course, of raising funds directly from the market. The result is a nascent “Mark II” investment fund, an ongoing pool of capital whose life will extend beyond that envisaged in the original, narrower City Deal.
CCR’s social interventions have been financed by challenge funds, grant funding aimed at tackling market shortcomings – whether by product (such as social housing) or place (such as the Northern Valleys). Future intervention here can also benefit from the evergreen approach if some of the returns on commercially-invested capital are seen as social dividends to be distributed and used locally.
Professor Clark’s positive assessment is the most recent review of CCR’s activities, and follows two successful rigorous and official “Gateway Reviews”, but the team is far from complacent. There are ongoing challenges, as Professor Clark notes here, and there have been shortcomings too – not least perhaps a failure to tell the CCR story as loudly and proudly as we could have.
Looking ahead, a lasting and formally “institutional” role for the South East Wales CJC will of course depend on how the new Welsh Government chooses to organise its economic development plans. Should it opt for a degree of regional implementation, the South East Wales CJC stands ready and fit for purpose.
Kevin Gardiner, Chair, South East Wales CJC Regional Growth Board
