Time for a City Deal rethink?
Call to take a regional approach
IT WAS heralded as a huge opportunity for the economy of the Swansea Bay City Region, which has some of the most deprived communities not just in Wales, but also the UK.
But two years on from the choreographed fanfare of the signing-off ceremony for its City Deal, with Prime Minister Theresa May and then First Minster Carwyn Jones centre stage, what was seen as the start of a new era of collaborative working between the region’s four local authorities – Swansea, Pembrokeshire, Neath Port Talbot and Carmarthenshire – continues to be mired in controversy.
And the latest blow has come with a stinging appraisal on progress to date from Neath Port Talbot Council, which has put its involvement on notice unless projects become a reality. Its chief executive, Steve Phillips, is right in his scathing assessment of a City Deal that urgently needs to put its house in order.
One positive sign is that the Swansea Bay City Deal’s joint committee, which includes the authorities’ chief executives and leaders, is committed to implementing, in full, the recommendations of two critical reports into its governance arrangements.
And those reports were anything but politically inspired “hatchet jobs” with arguably the more critical assessment coming from within, with a report compiled by a team of auditors drawn from all four councils.
The reality is that the City Deal to date has been driven by Swansea and Carmarthenshire councils. Both Pembrokeshire and Neath Port Talbot, while not quite casual observers, have been far less involved. What if Neath Port Talbot pulls out?
Hopefully, it will not come to that. But if it does, the deal can still proceed – albeit with one less authority using its borrowing powers to help finance projects. While it is billed as a £1.3bn City Deal, that includes projected leverage finance of £637m from the private sector. The Welsh and UK governments have committed in principle £241m.
To get projects away in the first five years, the four local authorities would use their borrowing powers and be paid back over 15 years.
As it stands, none of the 11 proposed schemes, many of which are hardly advanced, has been signed off by the UK and Welsh governments.
The proposed £200m Life Sciences and Wellness Village project for Llanelli, which is seeking a £40m City Deal contribution, has been put back down the pecking order. Its sponsor, Carmarthenshire Council, is seeking to develop a new funding and business model following the removal of development partner Sterling Health Security Holdings. The suspensions at Swansea University are also linked to the project.
Without university involvement, the project has no future.
So there needs to be honesty here and no time wasted trying to “revive a corpse”. The project has been driven by the soonto-retire chief executive of Carmarthenshire Council, Mark James, and Professor Marc Clement, the dean of Swansea University’s School of Management, who was suspended last year for gross misconduct, which he vehemently denies.
The bottom line is that all projects are 100% fundable, but it doesn’t means that all projects get 100% funding. Each project needs a huge investment from the private sector, and just how they would get a return remains unclear.
Regardless of the Wellness Village’s future, the City Deal needs a more regional approach and less of a focus on localised pet projects.
The internal review team’s report says: “Interviewees stated that some of the local projects were planned and would have been prioritised at local authority level, but were included in the Swansea Bay City Deal to access funding.”
There has been too much of a focus on buildings. Phase one of the Yr Egin creative industries project in Carmarthenshire, which is now home to S4C, wasn’t initially included for City Deal funding, but after a shortfall in funding was identified it was – highlighting clear weaknesses in governance arrangements.
On the surface there is nothing wrong with using part of the City Deal to help kick-start the muchneeded redevelopment of the centre of Swansea.
It follows other publicsector interventions, including Newport Council making effective use of its borrowing powers to access low-interest-bearing loan funding from the UK government’s Public Works Loan Board, that ensured the city’s Friars Walk scheme got built.
And in 2013, the Welsh Government also intervened to supported development of muchneeded new office space in the centre of Cardiff.
It acquired the investment interest in the now fully let One Capital Quarter office scheme at the wider Capital Quarter development. This timely intervention allowed developer JR Smart to invest in a new wave of offices, while the Welsh Government made a significant return after subsequently selling its investment in the building.
However, Swansea could have done this without seeking City Deal backing, but in fairness it has private developer partners on board and things are happening.
The UK and Welsh gov