Written evidence submitted by Hampshire County Council (LRS0061)

 

Please note this submission should be read in the context of the Government giving strong indications that it wishes to move towards a unitary council model for local government and in the expectation that the Devolution and Local Recovery White Paper, to be published shortly, follows these indications.

 

Context – about Hampshire the place

Hampshire is one of the largest English counties, covering 1,400 square miles.  Eighty-five per cent of it is classified as rural, with a third of it falls within a national park or a designated Area of Outstanding Natural Beauty. Its unique natural environment makes Hampshire a highly desirable place to live and work but it also increases the challenge of delivering sufficient housing and other infrastructure for its population (which is now over 1.3 million and rising) and to support its high value businesses, notably in its growth sectors of aerospace & defence, marine & maritime, and digital & financial sectors which, if backed by a coherent strategic structures, could significantly advance inclusive economic growth.

 

Although Hampshire has a relatively strong economy, recording £46.5bn GDP in 2018, the county includes significant pockets of deprivation e.g. in the southern districts of Gosport and Havant and in Rushmoor in the north of the county. Hampshire’s overall productivity lags behind the South East’s average.  Due to the dispersed nature of Hampshire’s communities the county remains heavily reliant on its road network which, given its strategic location, provides a key gateway for imports and exports, via the deep-sea Port of Southampton and which, in this post Brexit era, is set to become increasingly critical to the UK’s manufacturing base in the Midlands and the North. 

Hampshire’s large rural geography, combined with its growing and ageing population; high housing costs; congested transport network; digital/mobile black spots; and rising children’s and adult social care needs, all contribute to its socio-economic challenges.  Despite Hampshire’s educational attainment being above the national average and a significant capital programme, businesses often cite the shortage of high-skilled workers and poor land use planning, including uncertainties about development and infrastructure, as being key barriers to investment and business growth.  Hampshire has also been excluded from the economic benefits devolution provides as it has not been possible to build a consensus on a devolution deal with the 11 districts and neighbouring southern unitary councils.

About Hampshire County Council and its reasons for submitting this evidence

Hampshire County Council provides over 80% of local government services in Hampshire, spending around £1.9 bn per annum on serving the county’s 1.39 million residents and its 72,500 businesses which make up 14% of the South East’s economy.  The County Council is the only democratic body which serves the whole of Hampshire. It works closely with Hampshire’s 13 local planning authorities (11 district councils and two national park authorities); two Local Enterprise Partnerships - Solent LEP which covers the south of the county and Portsmouth and Southampton, and with Enterprise M3 LEP whose boundary stretches across the mid to north of Hampshire into Surrey. It also works with two unitary cities and the region’s five universities. It aims to foster a more cohesive, strategic, and outward looking approach to Covid19 recovery and renewal. By engaging academia and the private sector, the County Council is seeking to develop a place-based and business focussed approach to the region’s socio-economic challenges. This is to better harness Hampshire’s unique strengths and, in doing so, realise sustainable economic benefits for the whole county, including its more deprived communities. This approach builds on the vision and recommendations of the Hampshire 2050 Commission.

 

The County Council has a strong track record of using its scale, capacity and expertise to deliver infrastructure to bring forward new development and enable regeneration. It has developed a centre of excellence for economic development to support businesses and attract inward investment. Its commitment to inclusive growth is evidenced by its Skills & Participation Service and its own capital programme which, over the next three years, will deliver schemes totalling £386m to aid the economy and help retain Hampshire’s quality environment.  However, its ability to advance inclusive growth is curtailed by the complexities of the two-tier local government structure.  Despite much collaboration, the Authority’s lack of statutory strategic planning powers, amidst multiple planning authorities and two LEPs - with differing economic priorities - prevents a clear, cohesive and efficient approach to planning and investment.  The current arrangements lead to a fragmented approach to the business and skills agenda which Hampshire’s economy can ill afford at this time.

 

Building on success

The County Council welcomes the BEIS Select Committee Inquiry in the context of the above mentioned White Paper as there is a urgent need to simplify local growth funding mechanisms and Hampshire’s own local government structure to create more favourable conditions for private sector investment and enable the County Council to fully utilise its capacity and knowledge of region’s economy to drive forward inclusive growth far beyond Covid19 recovery. This is about building on success and recognising where the strengths, limitations, and challenges lie.  

 

To date Hampshire’s local planning authorities and LEPs have relied on the County Council’s expertise, strategic knowledge, and financial capacity to help deliver significant regeneration and to secure major investment opportunities. Examples include: 

      The £1bn regeneration of Whitehill & Borden in East Hampshire:  transforming a former garrison town into a green and economically sustainable town, involving the delivery of over 4,000 new homes and ssignificant commercial, retail and leisure development. Working collaboratively with a wide range of local partners, the County Council has played a pivotal role in early delivery of essential infrastructure, including a new £27m relief road (A325) and investing £10m in a new secondary school.

      Solent Enterprise Zone  once a military airport and training base, the site is now home to Fareham Innovation Centre (77 serviced office and workshop units, plus conference and meeting rooms) and CEMAST, the Centre of Excellence in Engineering, Manufacturing and Advanced Skills Training, where over 1000 students are enrolled in automotive, marine and aerospace related engineering and manufacturing apprenticeships to boost Hampshire’s skilled workforce for local employers, and where further commercial and community development is planned. The project has been largely led by Homes England, but it was the County Council that delivered all the essential infrastructure.

      Gulfstream at Farnborough Airport -  the County Council worked with the local planning authority and the LEP to secure Gulfstream’s £45 investment in a new 20,444-square-meter maintenance, repair and overhaul (MRO) facility at the business aviation-dedicated TAG Farnborough Airport and which is expected to create 600 jobs.  (Similarly, the County Council played a leading role in helping to secure the £33m Farnborough International Conference Centre)

 

However, as long as Hampshire lacks a single accountable strategic body tasked by Government to set a vision for economic growth and, critically, empowered to plan for and lead it, there will always be missed opportunities. The very nature of the two-tier structure prevents even well-intentioned councils from acting strategically, and sufficiently decisively and rapidly, to fully exploit ‘levelling up’ opportunities. In two-tier areas, such as Hampshire, there is a heavy focus on supporting SMEs within local districts but insufficient focus on working strategically, in terms of land use planning and skills provision, to better meet the needs of large corporates associated with the county’s growth sectors and which are so important to the levelling up agenda as they create the highest value jobs for local communities.

 

Challenges of Hampshire’s current structures and key changes required

Operating within the two-tier local government structure it is far harder to apply economic growth levers, such as the timely provision of affordable housing, employment sites, utilities, transport and digital infrastructure - particularly vital in large polycentric areas such as Hampshire. 

 

Since the abolition of county structure plans in 2004 there has been a vacuum in strategic planning, causing development, particularly medium and large scale sites to become increasingly locally controversial and harder to bring forward at scale and pace, supported with good and timely infrastructure. The County Council has sought to improve spatial planning through its Strategic Infrastructure Framework, but it lacks the formal mandate to ensure that this work is reflected in local plans, and developer funding policies, especially CIL. Hence plan-making in Hampshire in practice remains complex, fragmented, uncoordinated, and parochial, limited by the county’s 13 LPA boundaries, despite the ‘duty to co-operate’.  This, combined with weaknesses in the developer contributions system and inefficient local growth funding mechanisms, has led to a growing strategic infrastructure deficit. This deters investor confidence and limits the scale of ambition and speed of development, as witnessed north of Fareham where delays in funding essential transport infrastructure have delayed and may now further stall plans for Welborne Garden Village (see below).

 

Unitary areas have the advantage of key functions, such as planning, transport, economic development, housing and education, all under a single authority.  Furthermore, unitary structures are better positioned to benefit from devolution, such as the greater certainty combined authorities now have over funding economic infrastructure enabling them to plan a programme of schemes over a longer period. Whereas, under the two-tier structure, economic growth is heavily constrained by short-term funding settlements and resource intensive competitive bidding for individual infrastructure schemes which have no certainty of success and, these constraints would not be significantly affected by any move to create more than one unitary council in Hampshire.  Therefore upper-tier authorities should at least be granted strategic plan making powers with a duty placed on relevant local planning authorities and LEPs to cooperate for appropriate spatial planning and economic growth to be delivered.

 

Whilst the jury is still out on how effective LEPs have been in advancing economic growth, it is clear they are not uniform in their size nor in their governance. The Committee will be aware of reports highlighting the inconsistencies in LEP performance and willingness to proactively engage with stakeholders. Hampshire County Council works as closely possible with both Enterprise M3 LEP and Solent LEP.  However, both have different economic plans and skills strategies. This combined with their unique geographies makes establishing a cohesive Hampshire / county-wide approach to the business and skills agenda extremely difficult.  It also causes confusion for local partners and potential investors.  Furthermore, both LEPs have taken different approaches to the level of flex shown regarding the use of local growth funds to support the development and delivery of infrastructure projects. 

 

The efficiency of the DfT Retained Local Growth Funding process could be vastly improved if the funds were allocated directly to local highway authorities, rather than being funnelled via LEPs.  It would help minimise delays to transport schemes that are critical to local economic growth. It would avoid the unnecessary administration costs being incurred by LEPs under the current process.   For example, the County Council has developed the £34.5m Stubbington Bypass scheme to improve journey times to the Enterprise Zone and the wider Gosport peninsula to help attract investment and enable the area’s regeneration. The majority of the funding is DfT Retained Local Growth Funding, but the County Council has faced delays in securing the funding via the LEP which also top sliced £200k from the allocated sum to cover their own administrative costs.

Delivering a new ‘all moves’ Junction 10 off M27 to enable a major housing and employment development at Welborne Garden Village is another challenge the area faces due to complex processes governing DfT Retained Local Growth Funds.  The development and delivery of this scheme is essential to bring forward a regionally important development, comprising of 6,000 new homes, 9,7250m of employment space, and with the potential to create more than 5,700 new jobs. The scheme was allocated £25m of from the Solent LGF (including an element of DfT retained funding) but the funding for this crucially important scheme is now at an impasse, with the work on the scheme needing to be halted.  This is partly due to the complexity of the scheme and the relationship with Highways England, the complications over consolidating the funding into a single useable pot, as well as the local planning decisions to cap developer funding contributions to less than 30% of the costs.

The levelling up agenda would be better supported if LEP boundaries were coterminous with upper-tier authorities, where outside a combined authority area, are newly empowered to lead on strategic planning, infrastructure delivery and the local skills agenda.  Furthermore, the role of LEPs should be reviewed in light of the influence they currently have over large sums of public funds and their lack of direct democratic accountability.  Careful consideration should be given to the potential merits of establishing private sector led Growth Boards, as advocated by the Henham Strategy in its recent report, Making Counties Count.  Such boards, linked closely to strategic authorities, could ensure the voice of business is enhanced.  At the same time, they could better support the role of strategic authorities, enabling a more streamlined, efficient and democratically accountable structure to drive forward economic growth across county regions outside the current mayoral Combined Authority areas.  

 

Hampshire County Council would very much welcome the opportunity to provide the Committee with oral evidence to further inform this important inquiry but, in the meantime, should the Committee require any clarification on the points above please contact:

 

Joanna Richardson

Special Projects Manager

Economy Transport and Environment

Hampshire County Council

 

September 2020