Published: 14th Feb 2017

A city deal that works for all By Derek Walker

How could the city deal for the Cardiff Capital Region be used to create a ‘good’ local economy that addresses the needs and challenges faced by people across the region?

The Wales Co-operative Centre is working in partnership with the Bevan Foundation, the WCVA, the Centre for Local Economic Strategies, the New Economics Foundation and others to respond to this question.

There are a number of economic challenges in the region, not least the problems still faced by the loss of heavy industry. Economic inactivity is an issue across the region: the rate of people of working age in the region who are economically inactive is 25.2%.

The region’s geography also makes travelling across it, whether using private or public transport, a lengthy task. The purpose of the city deal is to tackle these challenges. The deal was agreed in March last year between the UK Government, the Welsh Government and the ten local authorities that make up the city region. It sets out a £1.2bn investment fund (supplied by both governments and the local authorities) over 20 years.

It seeks to deliver up to 25,000 new jobs and bring forward at least £4bn of additional investment from local partners and the private sector. Improved connectivity across the region is a key aspect of the deal and a priority for this is to use the fund to deliver the South Wales Metro project.

Overall the deal’s aim is to ‘achieve a 5 per cent uplift in the region’s GVA by delivering a range of programmes which will increase connectivity, improve physical and digital infrastructure as well as regional business governance.’

The deal is currently being ratified by each of the ten local authorities in the region. So far half of those have approved the deal and it is expected the other five will do likewise soon.

As a partnership we want to ensure that proposed investments made through the deal have as wide-ranging benefit as possible. As an example of this we would like to see opportunities for social businesses within the Metro project’s procurement chain, something we have explored with the team at Transport for Wales, the project delivery body.

Specifically we are interested in finding out:

  • How the plans set out for city deal investment will help the region deal with the social and economic changes predicted over the next two decades, such as increasing automation, and demographic change?
  • How the commission’s proposals will benefit communities outside Cardiff?
  • What measures will be put in place to ensure that the poorest communities gain from planned development?
  • How success will be measured. For instance if a measure of success is the number of jobs created, will the pay and conditions of those jobs be taken into account?

The first action from the city deal was to establish a Growth and Competitiveness Commission to draw up a list of recommendations that the city deal board should take forward as part of its economic strategy. These recommendations were published just before Christmas.

It is encouraging that the commission recognised the need for jobs and growth to benefit the entire region, for example recommending that employment rates in all of the region’s constituent areas are raised to the current capital region average (70.5%). The report also identified a number of opportunity areas and corridors for growth throughout the region, matching these up with the proposed Metro plans and ensuring the ‘region is organised spatially in a way that maximises the benefits for residents’.

Much of the commission’s report is welcome. However the Wales Co-operative Centre would like to see a far greater focus on stimulating local economic activity. Whilst improving transport links between areas of high deprivation and those of opportunity is obviously important, sustainable communities will only be created through increased economic activity locally. There needs to be a focus on stimulating the ‘foundational economy’, which is often overlooked in economic strategy. This is the sector of the economy that supplies everyday, essential goods and services such as social care, food processing, retailing and education. Small businesses and social enterprises operate in the foundational economy, which creates many more jobs than some other sectors that get far more political attention.

Work is ongoing to ensure that the city deal has a lasting impact on the region as a whole. As a partnership we want to make sure that inclusive growth and building resilient local economies are at the heart of the city region’s work and we will continue to work on this in the coming months.

  • Derek Walker is chief executive of the Wales Co-ooperative Centre