Frank Holmes, founder partner at Gambit Corporate Finance, chairs the Regional Economic Growth Partnership (REGP) which advises the Cardiff Capital Region’s (CCR) Regional Cabinet and leads on the economic growth planunderpinning the City Deal. Today, he looks at the progress achieved and sheds light on the REGP’s ambitions for the region.
Perhaps we could start this interview with a brief explanation of the Cardiff Capital Region City Deal and the governing bodies involved?
The CCR City Deal is a time-limited economic growth programme spanning 20 years, and attracting £1.2 billion of investment from Welsh Government, UK Government and 10 Local Authorities across the South East Wales region.
Of the £1.2 billion available, £738 million is ringfenced for the South Wales Metro and the remaining £495 million is ascribed to a Wider Investment Fund. The CCR City Deal is overseen and led by the CCR Joint Cabinet comprising the Leaders of 10 Local Authorities and advised by several boards including the REGP, the Regional Business Council and the Employment and Skills Board, with a view to driving four priority themes; business and innovation, regeneration, connectivity and skills and employment.
So, what are the REGP’s principal areas of focus?
The REGP board’s diverse membership is made up of individuals from business, two Leaders from Cardiff and Monmouthshire County Council respectively and representatives from Higher and Further Education, Employment and Social Enterprise.
Our principal role is to lead on developing a 20-year economic growth plan, advise on investment proposals for the Wider Investment Fund, as well as being advocates for promoting CCR within and outside of the region and attracting inward investment, both for relocating companies and private sector funding.
The REGP board was constituted at the end of January 2018 and in the interim has assessed City Deal protocols, investment submission and assessment processes, as well as reviewing investment proposals on digital connectivity, Metro infrastructure, education and skills, in particular apprenticeship programmes, and a proposed Housing Investment Fund. An extensive list of projects totalling over £800m has been abandoned by REGP, as a fragmented, disconnected, project-based investment approach is not acceptable.
So far, the CCR City Deal has invested in the Compound Semi-Conductor Cluster (£38 million), a world-leading and award-winning ecosystem, and recommended that the £180 million Metro Central project to modernise Cardiff Central and Queen Street stations progress to a business case proposal for £40 million of City Deal funding to sit alongside Welsh Government, UK Government and Private Sector Investment.
Kellie Beirne, who took over as the new City Deal Programme Director this summer, has fuelled the energy levels for actions embraced by REGP. The Economic Growth Development plan is underway and is our key focus, since we will identify those areas of investment which should have most influence on City Deal targets of achieving a 5% uplift in GVA, creating 25,000 new jobs and leveraging an additional £4 billion of private sector investment.
What are the main opportunities and challenges for the REGP board?
The REGP is acutely aware that the indicative growth and employment targets outlined could be achieved in isolation or collectively, but with the potential downside of delivering unsustainable growth as opposed to developing a thriving economy which is inclusive and regenerative.
Our strategy needs to address the cultural setbacks of ambition and dependency, plus years of a silo approach to sector and project investment, by adopting a competitive, industry led, government backed (beyond “enabling”) plan which addresses social and regional inequalities and focuses on value creation rather than value extraction.
The City Deal is no more than a catalyst for a long-term economic revival enabling the region to become self-sufficient as opposed to switching from the historic dependency on a grant culture to pursuing another City Deal, as £1.2 billion is not a lot of money in the context of the investment required to revitalise the South East region of Wales.
Where do you see the next few years’ focus?
Our immediate priority is to research, analyse, review and collate regional data from a number of sources, both public and private, which will accurately reveal growth challenges and social economic priorities of the CCR. This will identify the most appropriate interventions to boost competitiveness and productivity. Cures rarely arise from misdiagnosis and a fact-based view is more useful for navigating and enabling us to see what we need to do to make it better.
The SME-based economy requires its more ambitious members to be incentivised to grow into medium-sized enterprises with trading horizons beyond the UK and Europe. The public sector base must morph into an asset by generating procurement initiatives, enabling valuable data sharing, creating quality employment, and join with business to drive prosperity. Our HE and FE institutions need to prepare future generation’s skills for the changing world of work, encourage innovation and commercialisation of Intellectual Property through customised entrepreneurship programmes and real engagement with business.
Infrastructure and connectivity, in both transport and digital technologies, are priorities to enable our people to get to work from chosen accommodation. We have an opportunity to leverage and replicate the foresight of creating a CSC cluster ecosystem, with other place making opportunities in fintech, biosciences and engineering expertise in trains, automotive and aviation manufacture, embracing the connectivity of Metro to make this viable.
The CCR economic future will not be determined solely by innovation and technology, but by the integration of business and education with political and social institutional support.
What is the REGP ambition, short and medium term?
The REGP must be ambitious and drive considered investment proposals which will improve productivity, turning economic weakness into opportunity. This will require a lot more than the £495 million under its advisory stewardship. So we are actively looking to establish partnerships with the investor community to create an Investment, Infrastructure and Innovation Fund aimed at supplying long-term capital, co-investing with inward migrating companies whilst seeking to make acceptable levels of returns, recycling the capital and living off interest, as opposed to deploying grants.
This fund will focus on connectivity and infrastructure, embracing radical innovation opportunities as well as addressing the challenges of artificial intelligence and data economy, clean growth, the future of mobility and an ageing society, all of which will shape our educational and skills needs.
The REGP also ambitions to lead the delivery through data-based, industry-backed, interregional and international initiatives and create new markets within the region by co-partnering with the Public sector through a Public Services Testbed, unlocking innovative funding and taking risks proportionate to rigorously assessed rewards and returns. We’re also looking to develop more participative means for engagement, like Challenge Calls and Prizes.
At the same time, the REGP aims to build trust, enhance assurance and practice best-in-class governance. Beyond Brexit, City Deal may also become a conduit for other funds from UK Government. Wales cannot afford to miss out its fair share of the Treasury pot and we are raising our voice on the Shared Prosperity Fund.