Is the Growth Deal an Unchecked Drain on Public Funds?

Recent evaluations of Welsh growth deals have revealed significant shortcomings, with one deal delivering "very little" and another potentially draining public finances. These growth deals, designed to create jobs and attract private investment, face scrutiny over their effectiveness and accountability in achieving economic promises.

Last updated: 18 October 2023 (BST)

Key Takeaways

• Two of the four growth deals in Wales are underperforming, with the North Wales deal showing minimal progress.
• The Cardiff Capital Region's redevelopment of Aberthaw Power Station is at risk of becoming a financial burden.
• Funding uncertainties have hampered the execution of growth deals, with key targets being missed.
• Transparency and consistent leadership are deemed essential for the success of these economic initiatives.
• Despite concerns, the Swansea Bay deal has been praised for its effective job creation and investment support.

The State of Welsh Growth Deals

Wales has established four city and growth deals aimed at fostering economic development through job creation and attracting private investments. However, a recent report from the Economy, Trade and Rural Affairs Committee of the Senedd has raised alarms about the progress of these initiatives. Specifically, the North Wales growth deal and the Cardiff Capital Region's (CCR) plans for the Aberthaw Power Station redevelopment have been flagged as underperforming.

North Wales Growth Deal: A Struggle for Success

The North Wales growth deal is spearheaded by Ambition North Wales, which is responsible for coordinating local authorities and universities to manage investments effectively. However, the committee's report indicates that progress has been disappointingly slow. The decision not to develop small modular nuclear reactors at Trawsfynydd, which accounted for 40% of the investment target and 12.5% of job creation goals, has created a significant gap in the growth deal's portfolio.

Challenges Faced by Ambition North Wales

Ambition North Wales representatives have expressed concerns regarding funding uncertainty, which has delayed project delivery. They noted that unforeseen challenges such as Covid-19, inflation, and planning delays have hindered progress. As of the latest review, only one project was operational, while six others are in progress, collectively representing an investment of £130 million.

Cardiff Capital Region: Risks and Concerns

The Cardiff Capital Region's plans for the Aberthaw Power Station have also come under scrutiny. The committee highlighted that the site was purchased for £8.6 million but requires £30 million for demolition and could need upwards of £1 billion for its complete redevelopment. A procurement dispute earlier this year led to a £5.25 million settlement, raising concerns about the project's financial viability.

Job Creation Figures Under the Microscope

Despite the CCR asserting that it is "more than on track" to achieve its target of creating 25,000 jobs, the committee noted that only 1,537 direct jobs had been created nine years after signing the deal. Cardiff Capital Region leaders expressed disappointment in the committee's concerns, emphasising the positive outcomes that have emerged since 2017, which include over 4,300 jobs created and £236 million in co-investment.

Lessons from the Swansea Bay City Deal

In contrast to the challenges faced by the North Wales and Cardiff deals, the Swansea Bay city deal has garnered praise for its proactive approach to supporting workers affected by the closure of Tata Steel's blast furnaces in Port Talbot. The committee highlighted the need for effective strategies to ensure that the benefits of growth deals are felt across all regions in Wales.

Mid Wales Growth Deal: Unique Challenges Ahead

The Mid Wales growth deal is still in its infancy, grappling with unique economic challenges such as limited access to private investment and a less diverse economy. The committee has advised that the decision to remain outside the corporate joint committee model should be monitored closely to assess its impact on the deal's success.

Government Responses and Future Directions

The Welsh government has reiterated its commitment to supporting and monitoring all Welsh growth deals alongside the UK government. Clarity regarding the full £240 million originally allocated to the North Wales deal remains a point of contention, as there is concern that funding may not be fully realised.

Importance of Transparency and Leadership

Committee chairman Andrew RT Davies MS emphasised the need for proper monitoring and consistent leadership to ensure ambitious targets are met. He stated, "Transparency, clarity, and long-term vision are essential," underscoring the belief that growth deals should serve as vital drivers for economic growth in Wales.

Conclusion: The Road Ahead for Welsh Growth Deals

The future of Welsh growth deals hinges on addressing the current challenges and ensuring that funding is secured and effectively utilised. The ongoing evaluations and independent reviews will play a crucial role in determining the success of these initiatives. With the potential to create thousands of jobs and stimulate local economies, it is imperative that all stakeholders work collaboratively to fulfil the promises made to the people of Wales. The situation calls for proactive measures to avoid the risk of these deals becoming financial burdens rather than engines of growth.

FAQs

What are Welsh growth deals?

Welsh growth deals are economic initiatives aimed at creating jobs and attracting private investment in various regions of Wales through collaborative efforts between local authorities, the Welsh government, and the UK government.

What challenges are the North Wales growth deal facing?

The North Wales growth deal is struggling with slow progress, funding uncertainties, and the impact of not developing key projects, such as small modular nuclear reactors, which significantly affected its investment and job creation targets.

How many jobs have been created under the Cardiff Capital Region deal?

As of the latest report, the Cardiff Capital Region deal has created 1,537 direct jobs, significantly fewer than the targeted 25,000 jobs set out in the initial agreement.

What lessons can be learned from the Swansea Bay city deal?

The Swansea Bay city deal has been praised for its effective support for workers affected by industrial changes, demonstrating the importance of proactive strategies in achieving economic goals.

What is the role of the Welsh government in these deals?

The Welsh government is responsible for supporting and monitoring growth deals, ensuring that funding is appropriately allocated and that projects align with broader economic development goals.