10
Examination of witness
Peter Anstiss.
Q92 The Chair: Welcome to this evidence session of the Industry and Regulators Committee. It is part of our inquiry into the relationship between Government and the defence industry. The meeting is being broadcast live on the parliamentary website. There will be a Hansard record of this, which you will have a chance to look at in case we have misunderstood anything that you have said.
We are delighted to have with us Peter Anstiss from Team Barrow, which we will hear more about. He is director of strategic partnership and investment.
Peter Anstiss: For the last 18 months I have been part of the leadership team of Team Barrow, a partnership between the Westmorland and Furness Council—the local authority in south Cumbria—BAE Systems and the Ministry of Housing, Communities and Local Government. The department is the focal point in our partnership into central government. That is not the complete picture, however, because we also have some very influential national organisations such as the NHS, Homes England and many smaller organisations as part of the partnership to transform Barrow-in-Furness in the national endeavour to deliver the next generation of submarines.
The Chair: It is interesting, as we are looking at defence, that your main input to Government is through MHCLG, with Defence as an add-on. Can you tell us a little bit about that working relationship with national government and how it works in practice? You have already mentioned some of the different parts that you deal with, including the MoD. How well is all that working?
Peter Anstiss: By way of context, it is worth starting with the observation of how important the relationship with central government is. Several decades ago the national commitment was made to Barrow-in-Furness becoming the sole location where submarines for the Royal Navy could be designed, developed and manufactured. It has progressively meant that the shipyard—which since Victorian times had been making all sorts of products and services for surface vessels, submarines, ultimately military, commercial and so on—has had to focus on one product range, one customer. It naturally lost the ability to diversify. There is not an export market because of technology constraints and so on. The specialist facilities required, the skills, the cost base and the security environment mean that the only thing that can be done is the design, development and manufacturing of submarines.
Consequently, the fortunes of the yard and the fortunes of the people of Barrow have waxed and waned in direct relationship to defence procurement. Submarines, of all the defence products, have such huge impacts because of the vast value of the contracts and the cyclical nature of their procurement. They are products which are ordered in small batches, often with many years between those batches. That has resulted in a local economy with the major employer moving from a peak of circa 20,000 direct employees and maybe another 20,000 indirect employees to a trough of some 2,000 to 3,000.
For generations, the people of Barrow have had to contend with these huge cycles of feast and famine. Inevitably, therefore, when we talk about the relationship between what we are doing in Barrow and central government, we home in on defence procurement. Our Barrow Transformation Fund of just over £200 million is largely funded through the MoD, which reflects that relationship. It is vital that we acknowledge that Barrow—the town, the residents, the local area—has for decades been dependent on that relationship working.
To your point about why the entry point is with the Ministry of Housing, Communities and Local Government, it is worth reflecting on how the priority to address now in Barrow and the surrounding area is housing, the regeneration of the town centre and the transformation around that of some of the education and health and social infrastructure. However, at its core is the regeneration of the town and providing housing. At one end of the spectrum, it is providing social housing for existing residents, particularly those who have been disadvantaged by the recent trough in the town’s fortunes. It is also about looking forward to a dramatic increase in the number of people who will be employed—not just in the shipyard but in the dependent industries and so on.
I also draw the committee’s attention to how we are going to play host to Australians and Americans, military and civilian personnel whose first impressions of the UK will be formed by their secondment to Barrow-in-Furness and the surrounding area. As a nation, we have this overriding consideration for not just doing the right thing to address some of the inequalities of the past and to ensure that the national endeavour can be delivered. We also must recognise that we are an extension of the UK’s face to our allies and international partners.
One final introductory remark is that the great cycles of feast and famine are acknowledged by central government. One of the outcomes that we have been tasked with tackling is the diversification of the local economy, so that in the “out” years, after this future long-term growth phase that we are entering has peaked, we have an economy which is not so vulnerable to those cycles of defence procurement. Then new industries such as the offshore energy and green energy sector for production and storage of energy can be embraced and become a mainstay of the local economy—along with many other aspects which I can come back to of the hospitality, retail, sports and leisure sector. It is a huge task and the relationship with central government is key.
Q93 Baroness Valentine: I declare that I work with Business in the Community part-time, which has a relationship with British Aerospace, which we work with in Blackpool, just down the coast from Barrow. There is a partnership there that is comparable with that of Team Barrow. It is trying also to tackle deprivation and get everybody around the table.
Why has Team Barrow chosen the model that it has, with a separate organisation rather than local government taking the lead? What lessons can other areas with defence growth deals learn from Team Barrow’s experience and vice versa?
Peter Anstiss: On why we have we chosen this model, the important thing to note is that a diverse range of skills and experience is required to deliver this enormous challenge. It is a combination of understanding the demand, of creating the environment that will attract people to the area—which is a big issue. It is about creating an environment where people can exercise judgment based on their experience rather than being totally constrained by governance and process, looking at outcomes and benefits. It is recognised that to do that you must blend a combination of skills from industry, from Government with its access and influence, and with the local authority, which has the ability to lead on things such as planning, town centre regeneration, land acquisition and so on.
That combination is the optimum model to bring different skills, different experience and so on and to act as a vehicle from which an enormous amount of resource and capacity can be drawn upon if necessary. At its core sits a small group of people. I am representing the leadership team of a group of around 20, but the total partnership includes the horsepower that you can get from a local authority, central government, a global defence contractor allied to the NHS, Homes England, Associated British Ports and others. Those skills, that resource and that experience brought together is an essential prerequisite for the type of work that we are doing. It spans housing, town centre, healthcare, education, transport infrastructure, social equalities and social infrastructure. No single organisation has the breadth and remit to bring those skills and levels of experience to bear.
To your second point about whether there are lessons to be learned for other parts of the country, we very much hope so. We are flattered and daunted in equal measure in being held up as an exemplar in this way of working. Sir Keir Starmer, on a visit a year ago, observed that what was happening here was regarded as a blueprint for the nation. I think that he was referring to how just pouring large sums of money into infrastructure projects or defence, HS2 or whatever and expecting something to happen naturally which benefits communities and addresses any inequalities of the past is never going to work. We have found ourselves playing host to visits from all over the country. You met with colleagues from Plymouth whom we have spent some time with. We hosted visits from the team at Sizewell C. We are working with colleagues in Derby. We are demonstrating that, with the right interventions, not only can you put the money in the top of the hopper to produce, in this case, defence equipment, but you can also ensure that the community is sustainable around it. The capacity—the defence infrastructure that you need, which goes beyond manufacturing capability in a shipyard, which goes into the whole of the community—can be transformed with the right interventions.
Without those interventions, you end up with a very vibrant Monday-to-Thursday economy of typically single employees invariably going back on a Thursday night to their homes elsewhere in the north-west or even further afield in our case. The economy locally in Barrow-in-Furness from Thursday to Sunday has a real problem. It has empty hotels. It cannot sustain the retail, hospitality and tourist economy that most places can, despite being in an extraordinary location with amazing seascapes and landscapes, industrial heritage and amazing buildings. There is nothing between Thursday and Sunday because the necessary interventions have not been made in the past.
Our role is to change that and to put those interventions in place. It is an exemplar for other parts of the country. We are keen to pass on our experience without being complacent or arrogant that we have all the answers. The reality is that it is a steep learning curve for us all.
Q94 Baroness Valentine: Regarding your governance structure, you risk having a large pot of money coming into Barrow and some big players in MHCLG and British Aerospace. How do you balance that top-down with community interests? How do you get under the skin of what works for the community and that sort of model? I often find that if you put the money in too early, it works against getting the community to be honest about what the issues are.
Peter Anstiss: It is important to note that the money which Government invests in defence procurement to BAE Systems—which was formerly British Aerospace—is not something that Team Barrow is involved in. It is a BAE Systems responsibility, although it is very active as a company in the community with its social value agenda, et cetera. The money that we have equates to just over £20 million a year which, after our operating costs and all the commitments that we have for monitoring and evaluation, means that we probably have £12 million to £15 million at the moment of discretionary expenditure. This must address all the things that I have referred to. It is a large sum of money by any metric, until you come to do a town centre regeneration or create 7,000 homes and grow the population by 5,000 to sustain a national endeavour. You then quickly realise that it is a relatively small sum of money.
In terms of the governance structure, which was the related point, to date we have operated on a model whereby, essentially for convenience at start-up, we have benefited from the local authority being the accountable body. The central government funds have transferred into the local authority’s bank account. We apply local authority processes and procedures to spend that money in accordance with best practice and local authority governance. Looking ahead, within months, led by some very talented people within MHCLG, we have a new company, Barrow Rising, a company limited by guarantee. It will have a number of directors and people brought in from outside, who will be empowered to use their judgment and experience to take decisions in a way which we hope is more fleet of foot but builds on the experience of other parts of the country in doing similar things.
I say “similar things” because most other regeneration programmes are coping with a downturn. They are coping with the loss of a steelworks or another industry and trying to attract people to create an economy and employment. We have totally the opposite problem. We have huge demand and insufficient capacity in terms of accommodation, skilled people, construction workers and so on. We are in a completely different mode to other parts of the country. We must cope with dramatic growth to deliver the national endeavour.
The Chair: You have made a very good case for why we should spend our weekends in your nice hotels in Barrow.
Peter Anstiss: That is to be recommended.
The Chair: That takes us on very nicely to our next question.
Q95 Baroness Carberry of Muswell Hill: This follows up on your last point about the availability of skilled staff and particularly the skills that the defence industry needs and the shipyard and suppliers. You have told us that rather than seeking to source these skills locally, the industry sucks in staff from elsewhere, including from other countries. Is this something that Team Barrow is addressing? Presumably there are young people coming through the educational system in Barrow. You would want them to be fed into highly skilled areas. Is this a direct intervention that Team Barrow is engaged in?
Peter Anstiss: The organisation that is primarily responsible for the workforce in the yard is BAE Systems. Its approach has been to grow the workforce through apprenticeships. Some 800 applications for apprenticeships a year are accepted from around 6,000, 7,000 or more applications. There has been a dramatic growth in the number of apprentices and all that goes with that.
My comment about the Monday-to-Thursday economy refers to what happens if you do not intervene as I am describing. That is the natural thing that we have seen in Sizewell, for example, which a colleague from there has explained.
It is a question for BAE Systems how that workforce is delivered specifically for the yard, but what I can talk about is the Team Barrow experience in some of the other areas that are absolutely critical, notably construction skills. It is at this point that we should mention national competition. It might seem strange when we talk about massive growth in jobs and the opportunities for apprenticeships and skilled people to be gainfully employed for really good careers over the long term, but the reality is that we are at the south-west corner of Cumbria, geographically fairly remote. We do not have an enormous pool of people to draw on when it comes to local residents who aspire to go into, for example, construction skills. Nationally, we know there is a shortage, and the alternatives are in Derby, in Plymouth, on HS2, at Heathrow, at Sizewell and so on.
Barrow has to appeal not just in terms of the nature of the work but also the geography—its location—which of course quickly brings us back to the town centre; sports and leisure; arts and culture; hospitality; the visitor economy; and other jobs outside of the primary roles that may be advertising, for other family members who have no aspiration to build nuclear submarines or be in the construction sector. We need to create additional capabilities, hence the opening of the Barrow site of the University of Cumbria—which has courses not just in science and technology but also in nursing, for example, and entrepreneurship—our close association with local colleges and the academy schools and so on, the Furness Education Trust in particular, where a wide range of other skills are being encouraged in parallel to those required for the so-called national endeavour and the dependencies for construction. They are all intertwined. We have got to make Barrow the place where people aspire to live and work and bring their families up rather than to work Monday to Thursday, and that is changing. There has been success. Apprenticeships have been very successful. But it is a big challenge. We are in the first 18 months of operation and we have lots that we are very proud of, but we are under no illusions how big a task this is.
Baroness Carberry of Muswell Hill: For example, how is BAE Systems managing its relationships with local colleges and schools? Is Team Barrow as an entity content to allow the company to get on with that, or is there local encouragement and local intervention? Is there any central government involvement in trying to ensure a steady flow of young people coming out of those institutions into apprenticeships at all levels?
Peter Anstiss: As I say, I cannot speak on behalf of BAE Systems, but obviously I have worked very closely with them and I can observe the progress that has been made and the active engagement that they make in just those areas. What I would like to do, if I may, is to give you a very tangible example of Team Barrow working with our partners to deliver fundamental change to achieve these aims. Literally within the shadow of the yard, there is a secondary school—it has seen over the years, as a result of the sort of troughs that I have referred to, an exodus of talent and so on—that has now been rejuvenated. New leadership has come in. Most recently, within the last couple of months—through Team Barrow, using funding from the Barrow Transformation Fund, working with the Baker Dearing Educational Trust—we have invested £1.7 million in the creation of a university technical college sleeve for that school, which will have an impact of attracting talent, both teaching and pupils. It will transform the syllabus. It will enable more of the kids who progress from the school to be eligible for apprenticeships and other roles within not just the shipyard but other sectors. We are expecting that, within one to two years, those changes will manifest themselves in a much greater local participation in applications for apprenticeships.
I mentioned previously the Furness Education Trust, which has further education, schools and so on within its remit, and there is very close co-operation between industry and the trust. We are looking, for example, currently not just at direct support for the education components, but at things like a Barrow education and arts theatre, which could be both a small venue for the community but also primarily an education facility—to encourage people who aspire to go into the arts and culture sector and performing. Yes, there are a lot of interventions which we do on a daily basis, financially; and finally, we also channel the social value funding and the ESG (Environmental, Social, and Governance) support—the social responsibility agendas of many of the defence supply chain companies and others in the area, again in close association with BAE Systems. We encourage those companies to support investments in the community which have the same effect, using a percentage of some of the funds that they receive as a result of being involved in either the defence supply chain, the submarine yard infrastructure or perhaps offshore energy. It is an important part of what we do.
Q96 Lord Fuller: I was really interested in this. I used to lead a local authority myself, so this is familiar—and I was born and raised in Great Yarmouth.
Peter Anstiss: A coastal community.
Lord Fuller: For coastal communities, the aspirational points are very familiar to me. BAE Systems are driving this and they have their own commercial imperative, but you have got to support them. To what extent are you wholly reliant on funding from Government in all its guises to deliver your programme, or is there an idea that you might be able to put some sort of financing together? Funding is just writing the cheque; financing is putting the deal together. To what extent are you—your legal entity—and the council putting together a financing package that might be appropriate for wider investors? There is even the new mayoralty, which presumably is coming your way. Are you going to issue a Barrow bond, for example?
Peter Anstiss: First, the Barrow Transformation Fund, as it is known, is in effect central government funding through the MoD, and one or two other inputs from other parts of the innovation sector and education and healthcare and so on. But it sits at around £220 million over 10 years. Our aspiration is to use that as effectively seed funding, a sort of catalyst for giving confidence to other investors that this is a very real national endeavour. We have got firm footing for this. So my role has changed: in the last few months, I have moved from being the CEO with the leadership of the formation of Team Barrow, in its early stages at least, to now concentrating on the development of strategic partnerships and inward investment. What that means is that we are determined to get, just as you describe, funding from private sources. They could be major capital projects and programmes looking at infrastructure, whether that is improved rail connections, whether it is national health estates, whether it is a sports stadium, and so on. To address that, we have been dealing with the pension funds, the insurance companies, some associations like the Association of British Insurers, the National Wealth Fund, the British Business Bank and so on. There is a big pot that we are striving to achieve there.
However, it is also important to recognise that many of the things we want to do are just not big enough to get the attention of such big organisations. We want small interventions which can be game-changing for the local community. So we are also working with the local mutual building societies, such as the Furness and the Cumberland, very closely and they are very supportive of what we are doing. I have already mentioned the use of social value funding from the defence supply chain and others to invest in the community. We are also looking at philanthropy, which is another area where Barrow has a great history.
At the core of this partnership that I refer to are the three members I mentioned, but we have an enormous number of supporters. A major one locally is the Holker Estate Group—Lord Cavendish and his family. They are investing in social housing—further houses on a commercial basis for new homes for employees—but also have a history of making major contributions to the social infrastructure of Barrow and the surrounding area. My job is to do just that. It is to pitch Barrow and the opportunities, from huge infrastructure through to local social interventions that might benefit community groups, to complement the £200 million from central government.
Lord Fuller: Is there any marriage value with Sellafield?
Peter Anstiss: We work very closely with Britain’s energy coast. We work very closely with Sellafield in terms of our experiences. When we look at things such as the defence and energy coast rail upgrade, we connect very closely the nuclear waste requirements of the Sellafield organisations with those of Barrow. There is also how we look at the development of the royal port in Barrow, as it now is. How do we fully utilise that in support of the energy sector? A major infrastructure project under consideration is the geological disposal facility, a huge project off the coast of Cumbria, if that comes to fruition.
“Yes” is the short answer to your question. We work very closely with all the other infrastructure demands of Cumbria. People who visit quickly realise that there is more to Cumbria than the Lake District National Park, important though that is. The industry around the coast is quite extraordinary and the community spirit that we experience in Barrow is quite exceptional. People pick that up when they live and work in the area.
Q97 Lord Barber of Ainsdale: On getting investment into the town more widely, are there any changes that the Government could make that would support your efforts? You have talked about the fund, which is essentially central government funding, of £200 million or thereabouts over 10 years. Are there other things that Government could do to support your efforts to boost investment into Barrow? Does the relationship with defence and the centrality of defence to Barrow’s economy help or hinder getting wider investment?
Peter Anstiss: The two points are intrinsically linked. What defence does and what Government can do best is give a level of assurance and a level of confidence—some predictability of demand such that private investors and other investors have the confidence to progress with projects in housing, town centre regeneration and so on. Defence is a real asset. The economy is so dependent on it that even with the early progress that we are making in diversification activities for the foreseeable future, the fortunes of Barrow and the surrounding area will be totally dependent on the fortunes of defence.
It is very firmly an asset. It does condition how people live and work because of the security environment, the physical appearance, the dominant nature of the yard, the razor wire, the security environment, the high-vis jackets, the surveillance cameras and so on. It conditions daily life. We cannot play that down. That does affect some people, particularly those who do not aspire to careers in science and technology. However, overall that defence connection is a very important one. Our job is not to exploit it but to take full advantage of its potential.
What else could Government do? The key thing, which I have already mentioned, is to provide the assurance of the demand side of the equation. It is very important when I am talking to potential investors, for example, in housing and infrastructure, that they understand that there will be, for the foreseeable future, a growth in the population, that we will have this mix of students needing campus environment for the university, apprentices, people relocating for long-term careers in the yard, offshore energy specialists, construction workers and so on. It is also important that they see that this demand is real and not vulnerable to a procurement decision which changes direction or withdraws support in a particular grant scheme for bringing empty buildings back to life and reuse, for example. We need consistency of commitment to get the private investment. That is the key role of Government.
We are also very aware that the spotlight is on us a bit. We enjoy many visits and have a few coming up in the next week or two. Our job is to make sure that we put the message across that this is not just a one-way street—that for Government we are transforming the lives of citizens. We are addressing some of the inequalities that have arisen through decades of underinvestment. We are doing things which support the Government’s agenda. We are not just taking defence procurement money and using it for short-term benefits. We are putting in place long-term foundations for a very different economy and a very different Barrow-in-Furness. That is our objective.
The Chair: Thank you very much. That is probably the statement that you would most have liked to finish this session with, a nice upbeat one. I thank you on behalf of the committee. This has been invaluable for our work and our thinking. I thank you for your time and for your early start this morning to get down from the beautiful area in which you live to the grime of London.
Peter Anstiss: Thank you very much for the opportunity to contribute, and we would love to play host to you at some point to show you the fruits of our labours for us.
The Chair: Thank you. That concludes this hearing.
