Written evidence submitted by the Sheffield City Region Mayoral Combined Authority (LRS0013)

Executive Summary

This submission to The Business, Energy and Industrial Strategy Committee Sub-Inquiry on Levelling up: local and regional structures and the delivery of economic growth is submitted on behalf of Dan Jarvis MBE MP, Mayor of the Sheffield City Region (SCR).

This submission builds on the SCR MCA’s earlier submission to the BEIS Committee Inquiry on Post-Pandemic Economic Growth, submitted July 2020.

The COVID-19 pandemic and the social and economic impacts will likely be the biggest challenge faced by the UK since the war. South Yorkshire is still recovering from the post-industrial restructuring which decimated large parts of the social fabric and the economy. The area, its people and employers, cannot afford to be left behind again and be amongst the last to emerge from this crisis.

The Mayoral Combined Authority (MCA) and Local Enterprise Partnership (LEP) support economic growth and shape policy and decision making across South Yorkshire, covering Sheffield, Barnsley, Doncaster and Rotherham. It covers an area which is home to 1.4 million people, 47,000 businesses and 662,000 jobs.

The Mayor has led work with the LEP, the city region’s business community, councils, civic leaders, trade unions, universities and the voluntary sector to develop an Economic and Social Recovery Plan. In July 2020, the first phase of the Recovery Plan was sent to the Prime Minister and Chancellor. It calls for an immediate £1.7bn investment in SCR’s people, businesses and places.

Levelling up must begin now and investment is urgently needed to deliver the SCR Renewal Action Plan. The programmes and interventions in the Renewal Action Plan need to be delivered over the next 12 to 18 months to bring immediate relief to the people, employers and places, spark a strong and sustained recovery and accelerate the renewal of South Yorkshire.

Evidence base

What evidence have regional and local leaders based their local or regional industrial strategies on, and what forms of stakeholder engagement were included in the drafting of priorities?

Over the last year we have invested heavily in the development of a new Strategic Economic Plan. This is a twenty-year economic strategy which sets out the economic vision and policy objectives for our businesses, our communities and places. To ensure that our plan addresses the needs and ambitions of our businesses and partners, we engaged with more than 250 business leaders and organisations from the public, private and voluntary sectors on the draft strategy.

The region’s Strategic Economic Plan combines datasets at a national, regional and local authority levels, including quantitative indicators across a range of measures on productivity, skills, business growth and employment. The development of this evidence base was supported by an external peer review process involving academics from the universities in Sheffield. The analysis was made publicly available and widely shared and discussed as part of our stakeholder engagement programme.

We recognise that our evidence base requires qualitive data to complement and provide greater insights into quantitative numbers and statistics. As part of our SEP evidence base, we engaged with a range of stakeholders including Local Authorities, Chambers, business forums, public and third sector and the general public.

Considering the cost of institutions, what cost benefit analysis exists to show the value for taxpayers’ money when compared to the delivery of wealth and job creation?

The SCR MCA and LEP report and publish performance in the Sheffield City Region 2019/20 LEP Annual Report and Delivery Plan for 2020/21. This shows that in the last year we have met our target of investing £35.5million in the region’s economy, we attracted £140.5 million of private sector investment, created or safeguarded 5,246 jobs, supported 1,282 businesses, assisted 1,834 new learners and completed 326 new homes.

The Sheffield City Region LEP delivers a range of programmes to support the growth of the local economy. Over the last five years most of these programmes have been funded through the Local Growth Fund (LGF) – a £363.7 million investment that provides grants and loans to a broad range of projects over the period 2015 to 2021.

With a robust assurance and appraisal framework in place at the local level we have a transparent and rigorous approach to decision making that is considered best in class. These processes enable us to assess schemes against each other and prioritise where required whilst also using these processes to improve project design and delivery processes. We consistently look for ways to make our investments go further, reduce costs and leverage private sector investment.

Each year the Government undertake a review of LEP performance. The latest results of the Government’s Annual Performance Review indicated that SCR LEP was rated as ‘Good’ for Governance, Delivery and Strategy.

 

Local structures

 

Local structures: what structures exists across the country and how does this compare across different regions? How do these different tiers work together to deliver local growth? What good case studies exist, and can lessons be learnt from poor collaboration or leadership? How should local structures support delivery of regional growth across England?

The SCR Mayoral Combined Authority is led by a metro mayor who makes decisions about policy and spending with the council leaders and mayor from the four South Yorkshire councils. The MCA brings together different tiers of local and regional government enabling better use of all the different levers effecting local growth. The Mayoral Combined Authority and LEP were also able to work at speed to coalesce the business community, voluntary and community sector, the two universities in the region and other partners in the development of a Covid-19 Recovery Action Plan.

Where should government focus its post-Covid-19 levelling up policy to best support regional growth: English regions, core-cities, towns, Growth Hubs and LEPs?

The impact of coronavirus will be felt unevenly, and there is a risk that it could deepen existing social and regional inequalities. Government’s focus on levelling up needs to recognise that a greater level of investment needs to be made outside of the Greater South East, especially outside of the Golden Triangle of London-Oxford-Cambridge. Government policy should focus on investing in areas that are struggling but have potential to grow.

The Government should focus its post-Covid-19 levelling up policy at the appropriate level; this will sometimes be town, city, sub-region, or national. The SCRs £1.7bn Recovery Action Plan sets out an ambitious city region response – with synergies and shared priorities and some clear benefits from delivery at the city region level. However, many of the interventions will be delivered at a more local level and equally major transport infrastructure schemes and tourism and visitor economy promotion may be at a level above city region.

Do regional or local structures act in the best interests of local priorities and stakeholders or act more as a delivery arm of central Government?

Local democratic accountability is critical to how decisions are made. The SCR MCA is not an extension, or ‘delivery arm’, of national Government. However, MCAs are constrained by the funding environment they are in both through the piecemeal nature of funding settlements, the nature of the rules and silos inherent in government funding and the limited powers currently available to localities.

Stakeholder engagement

Stakeholder engagement: how does each tier of regional or local government engage with delivery stakeholders (such as businesses, education providers, etc)? Do different tiers engage in different ways? Where are there examples of good practice? Do stakeholders believe the different tiers are effective and worthwhile to engage with? Do stakeholders consider certain tiers to be more of a constraint on growth as opposed to a delivery partner for growth?

During the crisis, the strength of stakeholder engagement at a city region level was clearly demonstrated, as the Mayor of the Sheffield City Region brought together South Yorkshire’s major institutions to lead the region’s economic fightback to the Coronavirus pandemic. Made up of South Yorkshire’s private sector, business bodies, universities, trade unions, local authorities and community groups, the Mayoral Covid-19 Response Group met regularly throughout the crisis to make sure that the region can emerge stronger and more resilient. The group has been working together to establish the SCR Renewal Action Plan which is the city region’s shared plan to kick-start South Yorkshire’s economic fightback from the coronavirus pandemic, calling for an immediate £1.7bn investment in the region’s people, businesses and places.

The Renewal Action Plan sets out our road map for how South Yorkshire can recover from the tragedy caused by the pandemic and put itself on the path to social and economic renewal. In developing the plan, the Mayor was able to draw on expertise and insights from our advisory panel, business leaders, members of the Mayoral COVID-19 Response Group, universities, local authorities, institutions, and stakeholders.

 

The Mayor of Sheffield City Region has brought together representatives from the region’s local authorities, universities, trade unions and the Police and Crime Commissioner’s office to discuss a joined-up approach to tackling the challenges of the Climate Emergency in South Yorkshire. In response to the climate crisis, the Mayor has convened the SCR Net Zero Partnership made up of the heads of South Yorkshire’s anchor institutions to provide high-level advice. The group will work with local businesses, community and environmental groups and the SCR’s Youth Combined Authority to work towards the 2040 net zero target. They are working in partnership with environment and energy experts to draw up a detailed plan on how the region can achieve its net zero targets.

SCR Skills Bank is an example of an innovative locally designed solution and shows the benefits of devolving resources to local areas. SCR Skills Bank, delivered by Calderdale College, is a business led programme developed by the Local Enterprise Partnership. It uses devolved government funding and matches private sector investment with public funding to help businesses invest in their workforce and improve their productivity. The Skills Bank was designed in this way because businesses were telling us that publicly funded training for businesses can be hard to access and that the system is complicated. During the crisis the Skills Bank was able to respond quickly to support local businesses. Providers who were active with employers during the pandemic generated over 50 learning programmes specifically targeted at issues caused by the disruption. SCR was able to develop a fast-track mechanism to review and approve new aims such as Managing Staff Remotely, which were then quickly made available to employers.

The SCR Growth Hub has played an important role in helping businesses across South Yorkshire to access support during the covid-19 pandemic. It has been a central point for businesses who need guidance, advice and help working through the many business support schemes that have been announced. The Growth Hub’s role in supporting businesses has been developed over several years and this has involved a range of key stakeholders including Local Authority Teams, Higher Education Institutions, local Chambers of Commerce, business sector organisations and cluster groups and commercial providers of business support services.

Sustainable local economies

Sustainable local economies: how could a green economic recovery stimulate local economies and embed upskilling at a regional level? Which tiers are best placed to provide the leadership of local net zero and skills-based priorities? Should leadership responsibilities be separate from delivery responsibilities?

Proposals for immediate investment in the green economy, low-carbon energy and Active Travel are all included in the Sheffield City Region’s Renewal Action Plan, which sets out a roadmap for economic recovery from covid-19. In addition to this, SCR recently released its Energy Strategy which includes plans to ensure no new homes use fossil fuels by 2025, a zero-emission public transport fleet by 2035, and at least five mine water schemes, which use water from former mines to heat nearby homes and communities, by 2040. It aims to create thousands of jobs and training opportunities in the low carbon sector, and to cut car miles by a quarter.

Both the Renewal Action Plan and the Energy Strategy will rely on investment from both Government and the private sector. There will be responsibilities, actions and a need for collaboration at all levels, including local authority, city region, and national government.

Our net zero priorities are rooted in our own unique challenges and opportunities. South Yorkshire is already home to a hydrogen refueling station, with research taking place that could lead to a hydrogen-powered, zero emission bus network of the future. Meanwhile, the University of Sheffield Energy Institute’s new Translational Energy Research Centre, which will open later this year, will give start-ups, regional and global companies access to advanced facilities for low carbon energy research.

The SCR MCA is best placed to lead on the strategic work because it will involve changes to the structure of the economy and a focus on reskilling and investing in the right projects. The funding for this work will come from UKSPF and other funds available to the SCR MCA and LEP. The development and delivery of projects will be led at a local level by local authorities.

 

Targeted regional investment

 

Targeted regional investment: how could ‘shovel ready’ growth projects in England drive local growth and jobs?

SCR has many ‘shovel-ready’ infrastructure opportunities which can create good jobs and invest in the future of local communities, while also moving us toward our strategic goals. There is a constant pipeline of projects which need funding in Sheffield City Region and will unlock economic activity, bringing jobs and growth. For example, MHCLG recently urgently asked SCR MCA for a list of shovel-ready schemes that were deliverable in 18 months. Within just five days of the request SCR MCA had worked with local stakeholders to compile a comprehensive programme totalling nearly £250m. We have received £33m investment for the programme which unlocks 13% of the programme.

We’ve drawn up a detailed £270m plan for nature-friendly flood defences in South Yorkshire, including urgent projects to protect the places hit in 2019 and which the government’s current plans leave defenceless. With climate change making the risk of another disaster on the scale of 2019 ever greater, the government should be helping us implement it as soon as possible. Funding the South Yorkshire flood prevention programme would avoid an estimated £1.7bn in future damages alone.

How could clustered R&D investment support local growth? How should priorities be agreed across the regions?

 

SCR has a strong reputation as the home to a pioneering cluster of R&D, manufacturing technology and innovation companies that work alongside its universities. Our region’s approach to creating and promoting the Advanced Manufacturing Innovation District (AMID) over the past two decades as a means of bringing public, private and Higher Education partners together to drive innovation led economic growth is widely regarded as a leading example of innovation driven economic regeneration. Led by The University of Sheffield’s Advanced Manufacturing Research Centre (AMRC), considerable impact has been achieved in the region, providing a model for translational research led change. A second cluster, with a wellbeing focus, is being led by Sheffield Hallam University.

 

SCR MCA recognises the economic potential of strengthening this cluster and further extending its benefits to the whole of South Yorkshire. Investment in R&D is an important part of our plans to make our economy more productive and more innovative. However, it is important that R&D investment is translational - that it helps to grow indigenous businesses and creates specialisms and jobs in our wider economy. Local R&D research needs to be connected to our local economy to ensure that innovation benefits the entire city region and enables all people to participate. Increased investment in R&D has the potential to create the enabling conditions which will grow productivity, create jobs and improve lives, but, this social and economic renewal has to reach everyone, especially the most vulnerable.

 

The Government should seek to shift from competitive funding rounds for innovation investment to a strategic place-based approach that reflects existing strengths and future opportunities. The current approach pits places against each other, limits the potential for collaboration and leaves areas focusing on short-term opportunities rather than a joint process of planning and programming national, regional and local investment.

 

Regional funding

Regional funding: how should the UK Shared Prosperity Fund be specifically targeted to replace EU Funding and address regional inequality? What role should local structures play in allocating funding to best achieve regional growth?

The UK Shared Prosperity Fund (UKSPF) should be driven by regional strategy and specifically targeted to address regional inequality and distributed to areas with the lowest productivity and highest unemployment. The role of local structures should be to co-develop economic strategy based on consensus of priorities across sectors and stakeholders.

UKSPF should build on what is already working from the existing Local Growth Fund (LGF) programme and which is delivering positive outcomes.  Therefore, UKSPF should be designed to:

What role could the British Business Bank have in the post-Covid-19 levelling up of regional economies?

 

The British Business Bank (BBB) could have an important part to play in the post-Covid-19 levelling up of regional economies in the handling of microfinance, debt finance and equity finance. BBB, which is more like a fund manager than a bank, has an office in Sheffield and since 2016 it has built a good understanding of the investment support required by local small and medium sized businesses.

 

BBB runs the Northern Powerhouse Investment Fund which provides microfinance, debt finance and equity finance, which plug many of the common gaps in provision of finance for businesses. In SCR, it has loaned money to many businesses in difficult circumstances through the Coronavirus Business Interruption Scheme (CBILS). Many local businesses have also benefited from fast short-term finance from the Bounce Back Loan Scheme (BBLS), delivered by BBB, which provides support up to £50,000.

 

However, there is clearly already a serious shortage of money available for businesses needing microfinance. Providing evidence of credit worthiness to get loans is set to become harder still, as soon many businesses will have a balance sheets that show losses during the first quarter of 2020

 

Whilst BBB has strengths in lending money, grants should continue to be managed at a more local level by Mayoral Combined Authorities. In SCR, the MCA and LEP have consistently proven that economic growth and better value for money can be achieved when grant programmes are commissioned, managed and delivered at a local level. The SCR’s £12m Business Investment Fund programme has created and safeguarded 1,600 jobs and unlocked over £68m in match funding. For every £1 invested, our scheme unlocks £5.67 in private sector match funding. At a cost per job of £7,600, the scheme outperforms the previous national programme by almost £30,000 per job (reference National Audit Office (2014) Progress Report on the Regional Growth Fund).

 

Project Speed
 

Project Speed: Project Speed will bring forward proposals to deliver government’s public investment projects. How should Project Speed identify and distribute growth opportunities into communities across the country to best achieve its levelling up agenda? What should the balance be between Whitehall decision making and local decision making? Do we have the capacity and capabilities at local and/or regional level to do this work on behalf of central government?

Mayoral City Regions are uniquely placed to deliver strategic public investment projects more strategically and efficiently. Through our MCA and directly elected Mayor, we have robust, transparent, and democratically accountable leadership. This includes appropriate assurance mechanisms. The MCA works extremely closely with the LEP to combine the best of public and private sector leadership.

We have a track record of delivery at scale. Since 2012, the LEP and MCA have created 15,150 jobs and 2,200 apprenticeships; assisting 6,000 learners; leveraging £319m of investment and supporting 24,000 companies. The MCA and LEP are now two-thirds of the way through the delivery of its multi-year Growth Deal, which is forecast to eventually create more than 68,000 jobs, support 14,000 learners and leverage £1.6bn of investment.

Local areas make better decisions about inherently place-based challenges. We are closer to, and have a better understanding of, our local population profiles (skills, education, training), physical infrastructure, housing requirements, transport, and industrial/business opportunities.

The SCR MCA and LEP brings local stakeholders together to co-develop strategies and identify and distribute growth opportunities into communities across our area. For example, the local authority and NHS in Doncaster are currently working with the SCR MCA on a scheme to bring a new purpose-built hospital, medical research centre, and university centre to the urban centre of Doncaster. This will enable Doncaster to catalyse regeneration around its Waterfront, as well as bringing health and well-being innovation and research into the heart of the town.

SCR MCA’s Renewal Action Plan calls for Government funding to enable shovel-ready investment in decarbonisation and more broadly – creating jobs and growth while advancing its strategic economic, social and environmental goals. The investment we are requesting would create wide-ranging benefits: mitigating the worst socioeconomic impacts of covid-19, getting 55,000 people in work or training, helping 25,000 businesses to adapt and innovate, and accelerating key strategic objectives like decarbonisation. To achieve our ambitious vision, we require £1.72bn of investment. We will invest our own funds as part of this, but Government support is needed.

The investment we are asking for will not just deliver a jobs-led recovery to rescue the South Yorkshire economy; it will also help ‘level it up’. It will back people and our entrepreneurs when they need it the most, and create better, as well as more, jobs.

August 2020