Cornwall’s Economic Future: Whose Money is it Anyway? Growth Funding in a post Brexit world


A major discussion took place at County Hall today about how Cornwall will be best prepared to bid for new Growth funding post Brexit, what hoops the government expect us to jump through to get that money – and importantly who will control that money if we indeed do get any more.

First, let’s recap what has led to today’s discussions.

In April 2014 The Cornwall & Isles of Scilly Local Enterprise Partnership aka “The LEP” proudly announced that it had ‘secured a £198m Growth Deal for Cornwall’

In a press statement at the time the LEP boasted

“The deal, which follows months of negotiations, will see the Government invest £49m, mostly in the next two years, unlocking a further £149m from the public and private sector. Crucially, the LEP and local authorities have also secured new powers to make sure all spending decisions for the next EU funding programme are made locally. And in what is being seen as a breakthrough for devolved government from Whitehall, the LEP will also have more control over a range of other Government spending streams. The Growth Deal is the first major tranche of funding needed to deliver the Cornwall and Isles of Scilly Strategic Economic Plan”

The Strategic Plan, the LEP written economic blueprint for Cornwall, is still in place which the LEP said at it’s 2014 launch “outlines how £1 billion could be invested in the local economy in the next seven years. It aims to boost the economy of Cornwall and Isles of Scilly by £338 million per year, invest in providing more than 18,000 jobs, support the delivery of almost 14,000 new homes, bring skills up to at least national averages and exceed national renewable energy targets by 2020”.

Well those two years have passed quick and the money has been spent or earmarked long ago. So what now?

Today’s meeting asked that question and also who will control the future direction of economic policy.

A council official told the committee that despite the late start, Cornwall has caught up in the main  with spending and allocating the Euro money it was supposed to by now, in the spending round that goes from 2014-2020.

The government has promised that it will honour all Euro packages up til the moment we actually leave the EU. So whenever Article 50 gets triggered, we will have at least 2 more years of funding, and it could be longer depending on how long Brexit takes.

And so to today , the current chair the LEP Mark Duddrige was quizzed by councillors on what happens next in a post Brexit world, a scary place where public funding has been slashed and Cornwall will lose any “special status” we have enjoyed in the last decade or so.

Tim Dwelly grills the LEP at today’s committee meeting

“There wont be ‘Cornish money’ anymore” said Mark Duddridge today.

On behalf of the LEP,  he presented an update to the LEP’s plan, which will be called the Strategic Economic Plan Refresh.

“The SEP Refresh will, in practice, be delivered in concert with the Environmental Growth Strategy, the Health and Wellbeing Strategy and the two Local Plans – one for Cornwall, one for the Isles of Scilly”

Today’s report pointed out  “…there continue to be some challenges. Uppermost among these is the persistently poor wage levels commanded by those who work in C&IoS. Data relating to employees suggest that median levels of gross weekly earnings were actually unchanged in C&IoS between 2008/10 and 2013/15. Nationally, they increased by about 5% over the same period, and by 2013/15, median gross weekly earnings were over 30% higher across England as a whole than in Cornwall. This is a significant differential, and the fact that it appears to be growing is a real cause for concern.

Mr Duddridge pointed out that if the gap was closed it would put £4 – 5k into the average annual wage of the people of Cornwall.

Up til now, the LEP has written the plan and ultimately just suggests what the money should be spent on but the Council cabinet still gets a final say on the big projects. That, though, could be about to change, especially if the LEP gets it’s way.

Currently however, post the Brexit referendum, the Government won’t talk to anyone about any funding beyond 2018. Any projects that hadn’t been signed off before the Autumn Statement must now “fit into Government priorities” to have any chance of succeeding.
But worryingly for  democratic accountability, contained in this first draft of the Refresh is the suggestion that the unelected LEP will in the future get final say on how Cornish public money is spent. It is anticipated that document will be presented to the Cornwall Council Cabinet on 25 January 2017 for discussion and endorsement.

Democratic accountability was a well used phrase at today’s meeting.  Councillors raised concerns about the the recent development that saw Council CEO Kate Kennally install Sandra Rothwell as Service Director of the Council’s Economic and Culture department whilst silmultaneously remaining CEO of both the Cornwall & IOS LEP.

In light of this change, today’s committee pondered their own future and wondered where it leaves council scrutiny if there is a conflict between the Council and the LEP and Ms Rothwell is called for answers. Which hat will she be wearing? This obvious conflict has caused ripples amongst Councillors, the executive and the LEP itself who have questioned the effectiveness of the appointment.

The conversation continued on the theme of who should control Cornwall’s spending strategy in the future.

The committee debated a motion on whether the Council itself needs to bother with writing it’s own economic strategy document when the LEP has written one and the council has agreed to follow that plan? It was agreed to send this debate to full council with a recommendation from the committee that the Council retains it’s own strategy that will align with the LEP one.

The case is made from some that Council staff have actually secured and won more public funding money than the LEP in the same period, from sources like the Heritage Lottery. To some the LEP is all mouth no trousers.

“If council staff can get more money in than the LEP then why is the LEP driving the policy?” asked Mr Dwelly

“It’s comparing apples and pears” answered Mr Duddridge and commenting on the visit of Savid Javid “The Secretary of State was impressed by “one team Cornwall” when he visited last week”.

Cornwall Council has to hand in the updated SEP to the government in the new year and there has already been arguments over the detail contained in that – Cornwall Labour Leader and chair of today’s committee Tim Dwelly has accused the council of handing in the first draft without due process. “We’re not at war with the LEP but there are concerns” he told CS today.

Mr Dwelly outlined his concerns about the democratic process surrounding our public money in an interview with CS last week.

At the meeting today he tabled a motion that whatever committee is set up in the future after the current round of spending to oversee Cornwall’s economic strategy should contain a majority of members that are democratically accountable – in other words, people who have been elected.

Tim Dwelly Cornwall Labour leader who tabled a motion today supporting democracy

“If people think that the government won’t go for this they’re wrong – they have just agreed similar in their deal for Manchester. This is not an attempt to bring every decision back to Cornwall Council. It’s a proposal to set up a body with strong democratic accountability – that the replacement for the ITI board has elected people as a majority”

Formed in May 2011 at the behest of the Conservative part of the coalition, deliberately to give private enterprise the driver’s seat in forming strategies for growth, Cornwall IOS LEP is currently led by an appointed board of 9 successful and influential local business people, 3 nominated Cornwall Council representatives, 1 nominated representative from the Council of the Isles of Scilly and 1 Higher Education/Further Education representative.

This board is called the ITI board and was formed specifically in Cornwall because of our Euro money, as the EU refused to deal direct with the LEP. It is this board that will be replaced when the EU money stops. But they don’t just control the Euro money – in Cornwall we lump all our regional  funding and euro growth money together and we’ve called it The Growth Programme.

In the last Growth Deal you’ll note that Cornwall received £49 million from Westminster. In the Autumn Statement, which is a bit like ‘the budget’, the Chancellor Phillip Hammond made an announcement about the amount of money that will been allocated to each region in the next round of spending.

He announced that the government will allocate £191m to the ‘greater south west’ region, a figure that it self was lower than expected as this is out of a national figure of £1.8 billion. This particular incarnation of a ‘south west’ region covers 6 individual LEPs right up to Swindon and Gloucestershire. Cornwall has bid for £127m of the pot, Devon & Somerset nearly the same. For the whole region there are projects worth nearly £600m all competing for a slice of the £191m.

No one knows how much anyone will get yet, we might here before Xmas if we’re lucky.

Rumours have it that Cornwall’s share might be as little as £18m.

Mr Dwelly asked Mr Duddrige “If that figure turned out to be accurate would he feel this would be a failure of the LEP?”

“No” replied the LEP chair “but I am worried as we move out of the EU funding era”

“The government has applauded the ambition of Cornwall, the general direction is applauded” claimed Mr Duddrige.

But MK deputy leader Andrew Long took the LEP to task “When will the LEP start to actually do things rather than just having meetings about doing things?” he demanded to know

“We may be getting platitudes galore from the Government but we’re not getting money or firm action. While you talk nothing happens”

Mr Duddrige refuted this point and said his LEP team was working hard to take advantage of any opportunities available. Mr Duddrige was also complimentary about Cornwall’s 6 Tory MPs whom he said had all worked hard to get as much money for Cornwall as possible. However he did say that some recent comments made by Sheryll Murray and others in the Commons that were critical of the council and the LEP  have been disappointing and unhelpful.

“We need MPs who work with us not talk at us” commented Cllr Long.

As mentioned, the government has made clear that funding will favour those authorities that are implementing ‘National priorities’ – however there is no definitive list of what these priorities actually are, so it’s all guess work.

Tim Dwelly questioned the wisdom of creating a economic strategy that has a key ambition to close the 5% wage & productivity gap Cornwall has with the rest of UK if this has not been adopted by central government as a ‘national priority” – and warned not to expect the Government to make Cornwall a priority any time soon.

Julyan German, Portfolio Holder for Economy & Culture replied that even though he had had robust conversations with the government about what constitutes a ‘national priority’ he is still none the wiser. “We’ve included the ambition to close the wage gap as part of the strategy and central  government signed that off – they’ve approved it, does that make it now a national priority? We simply don’t know” he told the committee today.

However, there is one specific desire the Government has made itself clear about – and that is to install elected Mayors in each local authority. This is something that Cornwall, along with many other authorities including Devon and Somerset have refused to do. However Bristol is just about to get a Mayor, and the predictions are that the first elected Mayor of Brizzle will have a healthy share of the £191m regional prize pot as a reward and those that have refused will lose out.

Sandra Rothwell CEO CIOS LEP

Sandra Rothwell reacted by saying “What we don’t yet know is how much of the £127 million we have bid for will be allocated to us, but it will clearly be less than we have bid for and we know the fund was three times over-subscribed. We expect more detail soon and continue to work behind the scenes to argue our case for investment. It will be interesting to see how the Government’s preference for elected mayors in the regions impacts on allocations”

To put the South West’s £191 million into context, the new “Midlands Powerhouse” region, made in the Government’s preferred model,  is expected to receive about £500 million out of the £1.8 billion for growth.

It was Europe not Westminster  that agreed all those years ago to separate Cornwall from Devon to make a separate entity, a special case because of it’s poverty and lack of growth, that was awarded European Objective One status. The first of any little recognition from Westminster came ten years after that but our economic autonomy and so called devolution deals are now being whisked away before our very eyes. Post Brexit funding will become a bunfight of the regions, with Cornwall in very real danger of losing out on account of not fitting in to the latest Government regional policy.

We are told that the South West Growth Charter is the manifesto for this future. We’re told we must have a Mayor. We are being told we’re not doing what we’re told.

So what has happened to the ever further devolution and localism we were promised?

In the research for the SEP Update CIOS LEP asked Cornish businesses:

Where should public funding be prioritised over the next 15 years to make this happen?

Top answer :Infrastructure 30%

What do you sense is the single biggest challenge for business in CIoS?

Top Answer : Recruiting & retaining skilled people 50%

The public consultation is now closed, but here is the refreshed economic plan

Cornwall & IOS Strategic Economic Plan (SEP) REFRESH