Chancellor expected to back Swansea City Deal
Chancellor Philip Hammond is expected to confirm his support for a £1.3bn City Deal for the Swansea Bay City Region in his Budget next week.
While talks between the Swansea Bay City Region – made up of the local authorities of Neath Port Talbot, Swansea, Carmarthenshire and Pembrokeshire – and the Treasury are continuing, it is anticipated that Mr Hammond will reference the deal in his speech on Wednesday.
But it is still unclear whether it will be formal confirmation of an agreement, or a positive update that a deal is close to being finalised but that some further work is needed.
If agreed, there would be months of work ahead before a City Deal – which will ultimately be overseen by a joint committee on which only the region’s four leaders will have voting rights – is implemented through a dedicated delivery team.
Tory MP Byron Davies said: “I am confident that a deal will be done, but it could require a bit more work. I believe it is a little muddled at the moment, with too much focus on the public sector. We need to clearly see and understand what the role of the private sector, that will drive investment and job creation, will be.”
In all, 11 projects have been identified, with the aim of creating nearly 10,000 new jobs across the region over the next 15 years.
They include new a technology centre and steel science centre in Neath Port Talbot, a digital district in Swansea, a life science and wellbeing village for Llanelli’s Delta Lakes, and new creative digital cluster in Carmarthen.
Around half the funding would come from the private sector, with the rest coming from the borrowing powers of the four councils, backing from the UK and Welsh governments and other public sector partners.
However, the Chancellor is not expected to signal any backing for the proposed Swansea Bay tidal lagoon project – with negotiations continuing between the UK Government and Tidal Lagoon Power, the company behind the proposed £1.3bn project.
Tidal Lagoon Power is seeking a green subsidy, a so-called strike price, of £96.50 per megawatt hour of green energy generated for the first 60 years. The lagoon will have a lifespan of at least 120 years.
In January the project received a huge boost when an independent review, commissioned by the UK Government and chaired by former energy minister Charles Hendry, recommended the project should go ahead as a pathfinder, leading to a number of larger lagoons around the UK coast, including at Newport Cardiff and Colwyn Bay.
Mr Hendry concluded that tidal lagoons could make a strong contribution to UK energy security, would be affordable compared to other energy sources and offer a “significant economic opportunity for Wales and the UK more generally”.
The UK Government has yet to respond to the recommendations of the Hendry Review.
A source close to the tidal lagoon project said “it would not be an issue” if Mr Hammond doesn’t reference the project and that positive negotiations over a strike price were continuing.
Earlier this week more than 100 MPs signed a letter calling for the UK Government to back the project.
The letter to Business and Energy Secretary Greg Clark urged the Government to respond to the recommendations of the Hendry Review and “start negotiations for a pathfinder tidal lagoon in Swansea as soon as possible”.
Earlier this week a £1.2bn City Deal for the Cardiff Capital Region was ratified by the leaders of the region’s 10 local authorities.
However, the final projects that will be taken forward will not emerge until later this year – although some £734m has been ring-fenced for the next phase of the south-east Wales Metro with electrification of the Valley Lines.