Agenda item

To consider a report by Councillor Hugh Evans, Leader and Lead Member for the Economy and Corporate Governance (copy enclosed) seeking Cabinet’s endorsement of the Proposition Document for recommendation to Council for adoption and authorisation for the Leader to commit the Council, alongside its partners, to entering Heads of Terms agreement with the UK and Welsh governments.

RESOLVED that –

(a)       Cabinet endorse the Proposition Document for recommendation to Council for adoption as (1) the basis of a longer-term regional strategy for economic growth and (2) the regional bid for the priority programmes and projects from which the content of a Growth Deal will be drawn at the Heads of Terms Agreement stage with Governments.  Adoption does not commit the Council to any financial investment of its own at this stage and is subject to the financial risks and benefits of the final Growth Deal being set out in detail, for full consideration, when the final Deal is presented for approval at a later date, and

(b)       that the Leader be authorised to commit the Council to entering Heads of Terms with Governments alongside the political and professional leaders from the nine other statutory partners represented on the North Wales Economic Ambition Board, and the North Wales Mersey Dee Business Council, with the Proposition Document setting out the parameters for the Heads of Terms agreement.

Councillor Hugh Evans introduced the report seeking Cabinet’s endorsement of the Proposition Document for recommendation to Council for adoption and authorisation for the Leader to commit the Council, alongside its partners, to entering Heads of Terms agreement with the UK and Welsh governments.  He explained the need to consider the report at an earlier stage than planned in order that the Chancellor could include reference to the Growth Bid in the Autumn Statement on 29 October 2018.

Some background information was provided regarding previous collaborative approvals to adopt the Growth Vision and develop a Growth Deal Bid for the region.  The Proposition Document set out the priority programmes for activity and projects to be considered for inclusion in the Growth Deal at the Heads of Terms stage and required approval from all six North Wales local authorities as the next stage within the process.  It was stressed that adoption did not commit the Council to any financial investment of its own at this stage and was subject to the financial risks and benefits of the final Growth Deal being set out in detail, for consideration, when the final Deal was presented for approval at a later date.

The Leader advocated the Proposition Document as the best opportunity to expand the economy of North Wales and compete with other regions highlighting the possible impact on Denbighshire specifically.  The importance of Denbighshire aligning itself to other economic plans and strategies through the Growth Deal was also highlighted and it was noted that the Proposition Document was dependent on the delivery of other rail and road investment strategies such as Growth Track 360 and the Welsh Government Trunk Road Programme.  The Leader drew attention to the commitment of both UK and Welsh Governments to invest in the Growth Deal and highlighted the excellent relationship between the six Council Leaders in partnership with further and higher education and the private sector which had given confidence in that regard.  Once the potential extent and context of the Growth Deal was known, following agreement of Heads of Terms, a full risk assessment and cost-benefit analysis could be undertaken.  This would inform decision-making before the region entered into commitments at the stage of final Growth Deal agreement later in 2019.  Risk analysis was built into the business case modelling for the programmes and projects which made up the developing Bid.  All projects listed in the Proposition Document had an outline business case to demonstrate their value and worth.  Other important issues to note included –

·         the outline business cases were presently being assessed by civil servants in Cardiff and Swansea

·         a stakeholder group for the private sector had been established and challenge sessions had been conducted within the region

·         a risk schedule was being developed as part of the next stage – the Council’s financial commitments would become clearer over the next few months when the extent of both Governments financial commitment was known

·         if Denbighshire signed up to the Growth Deal there would likely be further opportunities following Brexit to engage the region into the Prosperity Fund.

The Corporate Director: Economy and Public Realm explained the purpose of the Proposition Document to set out a package of bold measures and interventions to deliver sustainable economic growth in North Wales.  He proceeded to guide Cabinet through the Proposition Document and pertinent points in relation to setting out the case for investment; strategic context and fit with government policy; option appraisal and preferred way forward; Growth Vision; project schedule list; economic case, finance and funding, empowering the region and the governance and delivery structure.  The Chief Executive added that Growth Deals elsewhere in the UK had resulted in significant investment and Denbighshire had a tremendous opportunity through the Growth Deal to secure investment in areas identified in the Corporate Plan including transport, digital, business development and learning and skills.

Cabinet recognised the benefits of progressing with the Growth Deal and during consideration of the report discussed the following –

·         in terms of financial commitment assurances were provided that the Council was not committing any additional financial resources at this stage in the process

·         if the Bid was successful details of the financial commitments required from individual local authorities in order to be part of the Growth Deal would likely become known as early as February/March 2019 and would depend on the amount of Government investment secured

·         if when considering the financial commitments the Council felt that the risks were too high and the benefits to Denbighshire or local benefits to the wider economy did not justify the level of investment from local government then a decision could be taken not to commit that finance and not be party to the pending Growth Deal

·         reference was made to the Bodelwyddan Key Strategic Site (KSS) and implications should the status of the site change following review of the Local Development Plan (LDP) – it was clarified that the site was recognised regionally as a KSS which could be funded depending on a prioritisation process.  In the event funding became available and the site was no longer allocated within the LDP the funding would not be unlocked

·         acknowledged that the impact on rural areas needed to be made clearer and discussions were currently ongoing in that regard.  However there were specific projects that would have a direct impact including digital, energy and skills and wider benefits to communities from the Growth Deal included positive impacts in terms of unemployment, healthcare, social care and mental health issues

·         the importance and extent of private sector involvement and investment in the Growth Deal was highlighted and it was noted that discussions with the private sector were ongoing in that regard – there was a private sector representative on the North Wales Economic Ambition Board and a Stakeholder Group had been established involving the private sector to progress expectations

·         clarified that the prioritised projects in the Proposition Document were currently being assessed and would be subject to further negotiation with the UK and Welsh Governments – whilst it would be too late to submit any new projects as part of the Growth Deal they could potentially be considered as part of the Growth Vision.

The Leader and officers responded to further questions from non-Cabinet members as follows –

·         reported upon the difficulties in predicting the financial implications given the number and cost of projects still to be approved, other partners contributions and assumptions some projects may generate future revenue – consequently a range of estimates had been provided with heavy caveats and with a peak cost for Denbighshire of £130k - £320k depending on a range of variables and over the fifteen year period there may be anything from no cost or over £1m costs – given those uncertainties financial implications should be noted at this stage

·         referred to Council Briefings on the Growth Bid and previous reports to Cabinet in that regard and confirmed that a similar report had been submitted to each of the six North Wales local authorities for consistency across the region

·         explained the context of the Local Development Plan in terms of the Bodelwyddan Key Strategic Site confirming that planning powers remained with the local authority and there were no proposals within the Proposition Document for a regional planning authority – projects in the Growth Bid would be based on the existing Local Development Plan and any changes to that would need to be considered at the appropriate time

·         assurances were provided that the risk and impact on the Welsh Language would be taken into account and it was expected that this element would also be considered as part of Welsh Government funding allocations

·         clarified the local scrutiny arrangements in the first stage Governance Agreement together with potential scrutiny options in the event of a second stage Governance Agreement which could include joint scrutiny, a coordinated scrutiny activity across the six councils and their own individual arrangements, or a hybrid thereof

·         some concern was expressed regarding projects relating to nuclear technology and it was clarified that the Wylfa Project was not part of the Growth Deal and the SMART Access to Energy Programme included a package of projects which accepted nuclear technology would be part of the UK’s energy production but also recognised low carbon projects being brought forward.  The two nuclear projects relating to Trawsfynydd Power Station and Nuclear Centre of Excellence amounted to about £38.6m of the total £335m capital investment sought from both governments and therefore was not considered heavily biased towards nuclear energy.  In terms of the political context there had been some cross party support for the Wylfa Project both locally and nationally.

RESOLVED that –

(a)       Cabinet endorse the Proposition Document for recommendation to Council for adoption as (1) the basis of a longer-term regional strategy for economic growth and (2) the regional bid for the priority programmes and projects from which the content of a Growth Deal will be drawn at the Heads of Terms Agreement stage with Governments.  Adoption does not commit the Council to any financial investment of its own at this stage and is subject to the financial risks and benefits of the final Growth Deal being set out in detail, for full consideration, when the final Deal is presented for approval at a later date, and

(b)       that the Leader be authorised to commit the Council to entering Heads of Terms with Governments alongside the political and professional leaders from the nine other statutory partners represented on the North Wales Economic Ambition Board, and the North Wales Mersey Dee Business Council, with the Proposition Document setting out the parameters for the Heads of Terms agreement.