The State of Britain

SW

The Henleaze and Barton Hill areas of Bristol are the wealthiest and poorest areas of the region, Cornwall LEP records the second best productivity growth in the UK and the SW loses its employment crown

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

The wealthiest area of the SW was the Henleaze area of Bristol with £40,600. This ranked the area 147th out of the 7,201 areas recorded. The poorest area of the region was also in Bristol, Barton Hill, with £15,600. This area was ranked 7,155 out of the 7,201 areas of the UK recorded.

Like most regions of the UK, output per hour in the SW is below the UK average. Productivity per hour in the region was 9.8% below the UK average which ranked the region sixth nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into the SW’s performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

At 10% above, the Swindon and Wiltshire LEP was one of eight economic regions which beat the UK average and was ranked 4th, the region’s other LEPs recorded productivity below the UK average. West of England was 11th at 1% below, the other four LEPs all performed poorly and ranged from 11% to 24% below the UK average. Dorset, Gloucestershire and Heart of the South West LEPs were ranked 26th, 27th and 34th. Cornwall at 24% below was ranked 43rd, the second worst in the UK.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The SW’s results for productivity growth were more mixed. With growth of 10% the Cornwall LEP was the second best in the UK. The Swindon and Wiltshire LEP was ranked 14th nationally with growth of 4%, beating the Heart of the South West which was ranked 22nd with 2% growth. West of England was a little behind at 25th with Dorset at 0% growth which ranked it 33rd.  The only one of the region’s LEPs which recorded productivity levels lower in 2018 than 2010 was Gloucestershire at -8%. The ranking of 43rd only beat Buckinghamshire Thames Valley LEP.

Despite this all of the SW’s four subregions recorded productivity below the UK average. Gloucestershire, Wiltshire and Bath/Bristol area -1%, Devon -16%, Dorset and Somerset -16% and Cornwall and Isles of Scilly -18%.

At a county level, with the exception of Swindon (+40%) and Bath and North East Somerset, North Somerset and South Gloucestershire (+7%) all of the SW’s economic regions recorded productivity below the UK average. Torbay had the lowest productivity, 26% below the UK average.

The growth in hours worked between 2010 and 2018 in Gloucestershire, Wiltshire and Bath/Bristol area was 13%, beating Dorset and Somerset which recorded 12%. In UK terms this level of growth was in the top half of the country’s 40 subregions. Cornwall and Isles of Scilly grew 7% and Devon grew 6% which ranked them in the bottom ten of the UK.

If the increase in economic output is also factored in then the sub regional performances are good, mirroring the region’s LEPs. Cornwall and Isles of was ranked 3rd in the UK with growth of 10%, Devon was placed 18th with 3%, Dorset and Somerset 25th with 2%  and Gloucestershire, Wiltshire and Bath/Bristol 32nd with 0.4%. 

More data from the ONS showed unemployment in the region was 10,000 higher at 87,000 between November and January; the uplift of 0.3% took the overall rate to 3.0%, the second best in the UK. Northern Ireland had the lowest rate of 2.4%, the North East the highest at 6.2%, with the UK rate at 3.9%.

The South East overtook the region and had the highest employment rate at 80% which compared with 79.9% in the SW where 2.8m are employed; the UK rate was 76.5%.

The SW’s average property price decreased by 1.8% to £254,320, which took the annual decrease to 0.1%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

A slight increase in growth shifts the region off the bottom of the national rankings, SW productivity contracts but regional employment still the best in the UK

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that the SW’s growth has uplifted from 0.4% to 0.6%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the SW eleventh (previous ranking twelfth) and suggests the region has marginally improved relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are better. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the SW the other eight English regions, and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the SW economy grew by 0.6%, down from 1% growth the previous quarter. This placed the SW seventh (previous ranking tenth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to June 2019 was much worse for the region than the previous quarter. The SW economy contracted by 0.6% in April to June 2019, following growth of 0.9% in January to March 2019.

This placed the SW eighth (previous ranking second) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, finance and administrative/support service activities both grew by 3.4% and 3.5% respectively but education and manufacturing fell by 4.4% and 2.3%.

In general all sectors in the SW fell, with construction, production, agriculture and services falling 2.3%, 2.2%, 1.3% and 0.2% respectively. Growth in the last two years in the services sector has remained stable relative to 2017 but the construction sector has fallen steadily since Quarter 4 (Oct to Dec) 2017.

Productivity

Like most regions of the UK, output per hour in the SW was below the UK average. Productivity in the SW was 9.8% under the norm which ranked the region sixth in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The SW moved down the rankings to eighth in terms of output per job. This means that on average workers in the SW worked shorter hours for each job compared with the UK average. The region’s 14.5% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The SW was ranked eighth as output per hour contracted by 0.7%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

Sectorally, productivity in administrative/support services was better than expected but arts/entertainment/recreation disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region increased by 5,000 to 80,000 between October and December; the uplift of 0.2% took the rate to 2.8%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

Despite a drop of 62,000 the South West still had the highest employment rate at 80.1% or 2.8m in employment; the UK rate was 76.5%.

In December, average earnings in the SW fell by £13 to £582 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The SW was ranked seventh (previous ranking fifth).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The SW’s average property price increased by 1.3% over the month to £262,286, the uplift took the annual increase to 2.2%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

The SW’s per head fiscal deficit drops to three figures, the Great South West Powerhouse mooted and Flybe rescued

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the SW had a deficit of £5.5bn, a smaller shortfall than the £6.6bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the SW’s deficit was £979, lower than the £1,188 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the SW was £69.4bn or £12,405 per head, an increase on the 2018 figure of £68.1bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The SW collected £63.9bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the SW increased by 12,000 to 82,000 between September and November 2019; the decrease of 0.5% took the overall rate to 2.8%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

Despite a fall of 1.1% the South West continued to (just) have the highest employment rate at 79.8% which compared with the UK employment rate at 76.3%.

SW average property prices fell by 0.3% during November 2019, the drop to £259,758, decreased annual growth to 1.1%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

Three Local Enterprise Partnerships (LEPs) and businesses in the south west are lobbying the government to recognise the ‘Great South West Powerhouse.’ The aim of the powerhouse is to create 190,000 jobs and generate £45bn of economic benefit.

Cornwall and Isles of Scilly, Dorset, and Heart of the South West LEPs and other stakeholders commissioned a report focusing on the growth potential of the area stretching from Dorset, Somerset and Devon through to Cornwall and the Isles of Scilly. Key industries to be targeted include ‘green’ economies, such as agriculture, and ‘blue’ economies, such as marine research.

The Great South West is effectively a ‘powerhouse’ brand to promote the three LEP areas. Other regional initiatives like the Midlands Engine and Northern Powerhouse can call on dedicated ministers Robert Jenrick and Jake Berry to push their brands. The LEP’s SW initiate requests formal recognition and an identified minister to link into Government, plus £2m over three years to help formulate a more detailed plan.

The Great South West powerhouse differs from the Western Gateway, a strategic partnership promoting economic growth across south Wales and the west of England which was launched last November.

Further north, South Gloucestershire Council is set to join North Somerset council and abandon the joint regional plan for housing and growth in the west of England, after planning inspectors were critical of the initiative which is known as the Joint Spatial Plan.

Four unitary authorities, South Gloucestershire, North Somerset, Bristol City and Bath & North East Somerset (B&NES) councils, were working together to draw up the plans which included 105,000 new homes. Strategic planning needs are now likely to be fostered by the West of England Combined Authority (Weca).

On transport, Exeter based Flybe is planning to discontinue its Newquay-Heathrow service in March, replacing it with flights from Newquay to London’s Gatwick airport. The route will still qualify for public subsidy known as public service obligations. The swap will not be welcome by businesses in the South West, which value the range of international destinations Heathrow provides and the inward investment opportunities it offers.

Earlier in the month ministers intervened in the airline sector confirming that Flybe will receive state support because of its regional connectivity role. The rescue deal details are unclear, but appear to offer deferral on the firm’s Air Passenger Duty (APD) and a short-term loan. Connect Airways – the consortium that includes Virgin Atlantic, Cyrus Capital and Stobart Group – which owns Flybe, will also inject another £30m into the business.

Unlike other collapsed businesses such as Carillion and Thomas Cook, the regional connectivity issue gives the government scope to intervene. Also provisions exist in EU state aid law that allow governments to intervene if a strategically important firm can be restructured within a certain time frame. A government review of the whole APD structure may make Flybe’s business model more viable.

The region records below average growth in 2018, Bath, North East Somerset and South Gloucestershire the regional stars, Torbay declines and has the third lowest GDP per head in the UK, the Gloucestershire LEP ranked second in the UK

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the SW economy grew by 0.9% in 2018, down from the 2017 growth rate of 2.5%. This placed the SW tenth (2017 ranking third) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

London topped the 2018 table with growth of 2.0% whilst Northern Ireland was at the bottom.

Within the region, the Bath, North East Somerset and South Gloucestershire economy grew the fastest at 6.2%, followed by Gloucestershire at 2.4% and Somerset at 1.4%. In UK terms, the highest annual growth of the 179 local areas was in Falkirk at 10.5%.

Five areas of the region saw their GDP decline in 2018. Torbay recorded the biggest drop at 6.6%, followed by Bristol at 3% and Swindon at 1.3%. Across the UK, the lowest annual growth of sub national areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 4.9% to £33,273 was seen in Bath, North East Somerset and South Gloucestershire although at £46,146 Swindon topped the region. GDP per head fell by 7.0% in Torbay to £17,409 which was the third lowest in the UK.

In terms of UK extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the SW economy were professional/scientific/technical activities at 3.5%, information/communication at 2.8% and transport and wholesale/retail up by 2.6%. Those areas that did not perform well were mining which dropped by 13%, agriculture was down by 5% and water supply services down by 3%. Overall the services sector grew by 1.6% whilst construction fell by 1.6% and production by 1.3%.

The 2018 performance of the region’s five enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, Gloucestershire was ranked second in the UK (2017 ranking third) with growth of 2.4%. West of England moved up the rankings from 31st to 6th with growth of 2.2%. With slower or negative growth, the region’s other three LEPs fell down the rankings, with the Swindon LEP slipping from 37th to 44th, Heart of the South West moving from 20th to 26th and Cornwall dropping 29 places to 33rd.

More data from the ONS showed unemployment in the SW increased by 8,000 to 76,000 between August and October 2019; the increase of 0.3% took the overall rate to 2.6%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 76.2% in the UK.

SW average property prices fell by 0.8% during October 2019 to £258,372, which took annual growth to 0.6%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

ESCoe regional growth figures suggest the SW sits bottom of the UK rankings, SW unemployment remains very low but the region loses its crown to Northern Ireland

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The pooling of cross-border skills and expertise on both sides of the Severn estuary could drive prosperity for the region. That was the view of Welsh Secretary, Alun Cairns, and Secretary of State for Communities, Robert Jenrick, at the launch of the Western Gateway, a strategic partnership promoting economic growth across south Wales and the west of England.

Linking a number of towns and cities across a wide region either side of the Severn, the Western Gateway will mirror the Northern Powerhouse and Midlands Engine.

On infrastructure investment, the SW did well this month.  Of the £374m Housing Infrastructure Fund spend announced by Jenrick, £204m was in the region. The funds will be invested in roads, schools, public transport and utilities.

In Wiltshire, there was £19m for the Southern Connector Road to link the Swindon New Eastern Villages development, and there was also £75m for the Chippenham Urban Expansion. In Cornwall, the Hayle Junctions Infrastructure Project will get £13m, and in North Somerset, the M5-A38 Strategic Development obtained £97m.

On jobs, Numatic International, the firm behind the Henry and Hattie vacuum cleaners, is to expand its Chard site by about a third to 34 acres.

The investment in buildings will create space for offices, storage, and research and development. About 300 new jobs could be added to the existing c1100 headcount.

Grocer Ocado, has announced plans for a new Customer Fulfilment Centre in Bristol, creating c815 jobs. The new centre is being built in an existing warehouse and is expected to be operational by early 2021 at the latest.

In Poole, Walstead Southernprint has begun a 45-day consultation with its 179 staff. The printing plant is slated for closure due to falling magazine volumes.

The firm said printing volumes had declined by c50% between 2011 and 2018, and that the Poole work could be absorbed by its other plants in Bicester, Peterborough and St Austell.

And in Cornwall, the oldest Cornish pasty maker in the world, Warrens, has said its St Just bakery is no longer viable. The firm will keep its south-east Cornwall factory in Callington but the St Just facility is too remote and will close with significant job losses likely.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the SW, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest available figures showed the SW’s economy grew by 1.0%, up from a contraction of 1.1% the previous quarter. This placed the SW tenth (previous ranking last) out of the twelve UK ‘regions.’

London topped the table with growth of 4.2%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also showed that growth in the region’s economy accelerated in the quarter to March 2019. The SW economy grew by 0.7% in January to March 2019, following growth of 0.3% in October to December 2018.

Manufacturing grew by 2.0%, the water supply, sewerage and waste management industry grew by 10.1% and the public administration and defence industries grew by 2.2%, whereas the information and communication industry, along with education, both fell by 1.7%.

Overall, the agriculture sector was the only sector to be a negative contributor to GDP growth – output in the production, construction and services sectors all grew.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the SW last (previous ranking third) with growth of 0.4%, which suggests the region has had a poor quarter relative to other parts of the UK. Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32%.

More data from the ONS showed unemployment in the region fell by 4,000 to 75,000 between July and September; the drop of 0.1% took the overall rate to 2.6%. For the first time in months though the region did not have the lowest rate, Northern Ireland recorded 2.5%, with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West did have the highest employment rate at 81.0% which compared with the UK rate at 76.0%.

In September, average earnings in the SW were down by £8 to £595 per week. London had the highest average earnings of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

The SW’s average property price was flat over the month at £260,158, which took annual growth to 0.5%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

Wages in Weston-Super-Mare drop the most in the country, the UK’s first Superbus network trialled in Cornwall and plans to suspend people above Bristol in a bubble

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Unemployment in the SW decreased by 7,000 to 70,000 between June and August, which took the overall rate to 2.4%, the lowest in the UK. The UK rate is 3.9% with the highest rate of 5.8% recorded in the North East.

The South West also had the highest employment rate at 81.0% which compared with a UK rate of 75.9%.

SW average property prices increased by 0.7% to £260,901, which took annual growth to 0.9%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

Analysis by the BBC has found workers living in seaside areas in Great Britain earn on average £1,600 less per year than those living inland. Since 2010 wages fell by c25% in real terms in Weston-Super-Mare, the biggest drop in the UK.

Overall, in coastal constituencies median wages were £22,104 compared with £23,785 in non-coastal areas.

The ONS’s Personal Well-being (or Happiness) Index has ranked the SW tenth out of the 12 UK ‘regions in terms of improved happiness since the last survey. Overall though, the Northern Irish were still the happiest in the UK with Londoners still the most miserable.

Development

There was some disquiet from ratepayers across the county after it was revealed that canny Cheltenham Borough Council has borrowed c£40m from five other councils to fund the purchase of 45 hectares of land for a cyber business park and up to 3,000 homes near GCHQ.

Cheltenham borrowed £15m from Middlesbrough Borough Council, £4m from Derby City Council, £10m from South Lanarkshire Council and £5m each from Anglesey and Powys councils.

A Freedom of Information request by the Local Democracy Reporting Service was no doubt viewed as inconvenient by some councillors across the UK, who faced questions from voters wondering why the money was not spent on public services in their own areas.

More innovation in Cheltenham, this time the Borough Council has agreed a land swap with Gloucestershire County Council, enabling the building of a hub for start-ups.

The hub is aimed at young entrepreneurs who might otherwise leave the town plus the creative sector. The project was also supported by the Local Enterprise Partnership, GFirst LEP.

Cornwall’s Eden Project will drill almost three miles underground as part of a geothermal project which will produce power for its own needs and the local area.

Public money makes up the bulk of the Eden’s £17m funding, £9.9m from the European Regional Development Fund, £1.4m from Cornwall Council and institutional investors contributing the remaining £5.5m.

The funding will pay for one well which will initially supply a district heating system for the biomes, offices and greenhouses at Eden. A second well could later feed an electricity plant.

The London Eye, the Angel of the North and the Eden Project were all innovative and have all brought in vast numbers of visitors to their respective areas. Now a £13.5m glass observation cabin has been proposed in the centre of Bristol.

Suspended between two masts, the cabin would lift up to 42 passengers above the city offering 360-degree views. Arc Bristol would be 69m tall and be located by the harbour side.

Jobs

Despite good regional labour figures there were some notable disappointments this month.

Japanese car parts company Honda Logistics UK is to shut its operations in Swindon next year. The firm supplies Honda but it is not part of the Honda group.

The closure is directly linked with Honda’s decision to end production of its cars in Swindon in 2021, 1,200 jobs at Honda Logistics are at risk.

In Wiltshire, Dyson is to close its automotive division because its new electric car is not commercially viable. Although the firm aims to redeploy as many workers as possible, 500 jobs could go. Dyson has invested £200m in the project and can only be applauded for trying.

A call centre in Derriford, Plymouth, run by Sitel on behalf of the John Lewis Partnership will be impacted by the retailer’s decision to strengthen its in-house contact centres. John Lewis said about 200 jobs would go but call centre managers have told staff to expect more than 300 redundancies.

Meat processing firm, Tulip, has begun consultation over proposals to close its factory in Bodmin, 270 jobs are at risk. The firm says the Cornish plant is currently not viable and is seeking a joint recovery plan with stakeholders to see if its future can be secured.

On some measures, parts of Bodmin are some of the most deprived in the UK.

Transport

Superbus networks will introduce low fares and bus priority measures to speed up journeys and improve reliability. The networks form part of the government’s long-term bus strategy and £220m funding settlement, which it hopes will see many cuts to services reversed.

The UK’s first Superbus network will be established across Cornwall. The fares pilot is part of a project to create an integrated public transport system for the county.

Cornwall has been chosen as the county has significant deprivation and social exclusion. Buses are disproportionately used by people on lower incomes.

The region did well on infrastructure investment this month.  Of the £100m spend announced by the Department of Transport, £45.4m was in the SW where two new roads will be built.

There was £22.5m for improving the intersection between the A419 and A420 to the east of Swindon and £22.9m for the construction of an access road to the Wichelstowe development site under the M4 motorway.

Space flight a step closer in Cornwall, market failure in Gloucester and the ONS’s first cut at regional GDP unwelcome news in the South West

Reading Time: 4 minutesThe Ministry of Housing, Communities and Local Government has published its deprivation index which looks at an area’s levels of income, employment, education, health and crime as well as housing services and living environment. Jaywick in Essex, near Clacton-on-Sea, was previously found to be the most deprived in the last two reports in 2010 and 2015 and it has won this unwelcome accolade again. Jaywick is followed by nine areas of the North West as the most deprived in England, the Hartcliffe area of Bristol is the first SW entry ranked at 91st. The Ministry divides England up into 32,844 neighbourhoods averaging about 1,500 residents or 650 households each. In terms of local authorities, 17% of Plymouth was classified as deprived which ranked the city the 50th worst in the UK.

The MHCLG found concentrations of deprivation in a number of coastal towns, many of which are in the South West, and there was new money for the region in the latest tranche of the Coastal Communities Fund, with Poole/Bournemouth and Lydney Harbour winners. The Dorset project will create an environmental innovation hub and will feature eco-accommodation and leisure facilities and improved public lighting. The hub will focus on reducing single-use plastics through a programme of research and public recycling initiatives. The Lydney project will create transport routes into the harbour and develop the area as a recreation and tourism destination.

Also Penzance, St Ives and Torquay were some of the SW towns invited to apply for regeneration funding as part of the £3.6bn Towns Fund which is targeted at 100 English towns. Towns must submit economic growth plans with a focus on improved transport, broadband connectivity, skills and culture. The South West was also awarded £13.7m as part of a £95m pot to revive historic high streets, with Poole again benefiting, along with Redruth, Plymouth and another half dozen or so regional towns.

Development
Spaceport Cornwall – a horizontal launch site at Newquay airport from which satellites will be sent into orbit – should be underpinned with £12m from Cornwall Council, after the funding was approved by the council’s cabinet. The £12m is part of an investment package which also includes £7.85m from the UK Space Agency and £2.5m from Virgin Orbit. The Virgin Orbit jet, a modified Boeing 747 called Cosmic Girl, will carry satellite launchers which are released before accelerating and discharging the satellite into space. The Spaceport could also be used to send fee-paying passengers on sub-orbital flights.

A proposed £140m development at Bristol’s old fire station which includes office space, 231 new rental homes and more than 60 affordable flats has been recommended by planners. Two residential tower blocks (16-storey and 10-storey) and an eight-storey building with office space, form the core of the project.

There is clear market failure in Gloucester, where the 15th Century Fleece Hotel in Westgate Street has been empty since 2002. Gloucester City Council will invest in the hotel with a private developer and redevelop it into a boutique hotel and restaurants. The Fleece first opened in 1497 to house pilgrims visiting the tomb of King Edward II.

Redeveloping three Victorian Spa buildings into a heritage centre near the Roman Baths and revealing previously unseen areas of the Roman complex, such as a Roman laconicum and a possible Roman exercise yard, will attract 100,000 visitors a year according to Bath and North East Somerset council’s heritage team. The project has secured £3.4m from the Heritage Lottery Fund and if approved will open in 2020.

Jobs
Morrisons is proposing to close its Regent Circus store in Swindon as part of a nationwide performance review which has recommended four UK branches for closure. The store only opened in October 2014 as part of a new leisure and retail complex designed to regenerate the site of a derelict former college building, headcount is 113.

In Somerset, the National Animal Welfare Trust’s Heaven’s Gate Farm, near Langport, faces closure putting 31 jobs at risk. The charity also operates rescue and re-homing centres for domestic pets across Berkshire, Bedfordshire, Cornwall, Essex, and Hertfordshire.

The Stats
For the first time, the ONS has published quarterly GDP estimates for the South West, the eight other English regions and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The latest available figures, which are for the year ended 2018, showed the SW economy declined by 1.1%. This ranked the region bottom of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the education sector grew by 6.4%, while the administrative and support services industries grew by 3.0% and made the largest positive contributions to growth, however, the construction industry fell by 2.8% and financial industries fell by 3.4% and were the largest negative contributors in the region. Overall, the services sector was the only sector-level positive contributor to GDP growth, both the production and construction sectors contracted. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked the SW third with growth of 1.9%, which suggests the region has had a better 2019 so far relative to other parts of the UK.

More data from the ONS showed that unemployment in the SW decreased by 10,000 to 68,000 between May and July; the drop of 0.3% took the overall rate to 2.4% which was the best in the UK. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8%. UK employment was estimated at 76.1%.

SW average property prices increased by 1.2% to £258,602, which took annual growth to 0.7%. In comparison, UK prices grew by 0.5% to £232,710 during July, also an annual growth rate of 0.7%.

South West growth and unemployment stats compare well with other parts of the UK and Bristol City Council’s attempts to run an energy business continues to soak up public funds

Reading Time: 3 minutesGrowth in the South West was 1.9% in the year to June 2019, according to estimates from ESCoE, ranking the region third (out of twelve UK ‘regions’). The drop from the previous quarter’s growth of 2.3% suggests the region’s economy is contracting. At 2.3%, London had the best performance with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, falling growth in the South West reflects this and is similar to other regional economies which have also shrunk.

Unemployment in the South West increased by 10,000 to 79,000 between April and June, an uplift of 0.3% to 2.7%, the lowest rate in the UK. The North East had the highest at 5.3% with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5% which compared with 76.1% in the UK, the joint highest since comparative records began in 1971.

In June, South West average earnings increased from £571 to £603 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.

The South West’s average property price fell during the month, the 0.4% drop to £252,122 meant prices have fallen by 0.2% annually. In comparison UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.

On interventions, Cheltenham Borough Council has bought land on which it will build a cyber business park near GCHQ. The council borrowed £37.5m to spend on 45 hectares which will also be used for up to 3,000 new homes. The £650m cyber business park project has been developed in partnership with Tewkesbury Borough Council, Gloucestershire County Council and the Gloucestershire Local Enterprise Partnership. The cyber business park will benefit from a £22m project designed to ease congestion by widening the Arle Court Roundabout and increasing capacity at J11 of the M5. Further plans include adding extra lanes past GCHQ and improving cycling and pedestrian access from Cheltenham Spa railway station.

Also on interventions, and highlighting the problems which can occur when the state gets involved in energy businesses, Bristol City Council owned Bristol Energy lost c£10m last year. Bristol Energy was set up in 2016 to provide ethically sourced, low-cost power and return a profit for Bristol taxpayers; instead the venture has so far soaked up £37m of public funds.

The last-minute cancellation of the Boardmasters festival amid storm warnings is set to cost the Cornish economy an estimated £45m. The annual festival takes place over five days, attracting over 80,000 unique visitors and generating 240,000 visitor days. The lost event’s revenue and supplier spend supports the equivalent of 335 full time jobs within the county.

A report by an All-Party Parliamentary Group (‘APPG’) of MPs which investigates Post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Existing less developed regions like Cornwall, will be joined by Lincolnshire, South Yorkshire, Tees Valley & Durham. These areas would have potentially received at least €500 per head in EU regional development funding over 2021-27 which adds up to an extra £950m.

Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75 – 100 per cent of the EU average, compared to 75 – 90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head qualifying them for ‘transition region’ status. They are East Anglia, East Wales, Greater Manchester, Leicestershire, Rutland & Northamptonshire, Outer London South, North Yorkshire and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, or but €50 per head over the next EU spending round would equate to £560m.

The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Fund. Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated and mesh with other pots like City Deals is yet to be determined.

The South West retains the lowest unemployment rate in the UK, the West of England local industrial strategy published and the ‘Great Western Powerhouse’ mooted

Reading Time: 4 minutesUnemployment in the South West of England was unchanged at 76,000 between March and May. At 2.6% the region had the lowest rate in the UK and at 5.6% the North East had the highest rate. The national unemployment rate stands at 3.8%.

The South West of England’s average property price increased by 1.2% to £257,563 during the month which uplifted the annual growth rate to 2.7%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

The West of England has become one of the first regions to agree a local industrial strategy with the government. The 78 page document was developed by the West of England Combined authority/LEP in collaboration with businesses and was signed off by Business Secretary, Greg Clark.

The strategy includes; a new Global Centre of Innovation Excellence, developing new products and services through a new West of England Network of Living Labs, including more regional providers in businesses’ supply chains, incentivising companies towards low carbon business models and investing in infrastructure that reduces energy demand. The plan also envisages supporting businesses to adopt new clean technology and energy efficiency measures plus building new carbon-neutral homes.

In another report, this one smaller at 49 pages, a cross-border economic collaboration between south-east Wales and the west of England has been envisaged. Commissioned by Cardiff, Newport and Bristol councils the report into a ‘Great Western Powerhouse’ could boost industry and improve transport links and aims to enhance the region’s profile. Echoing The Northern Powerhouse strategy, the Great Western Powerhouse report reflects the trend towards greater regional devolution and the emergence of regional powerhouses in the UK. The report suggests a M4 powerhouse stretching from Swansea in the west to Swindon and Bath in the east, and as far north as Tewkesbury. There are already three established city regions and plans but no overarching powerhouse concept for the region. The report argues that the Northern Powerhouse and Midlands Engine ‘brands’ have been successful at attracting significant levels of government funding and investment. The cyber security, aerospace and creative industries are examples of complementary strengths. The report calls for the UK and Welsh governments to help set up a cross-border organisation to co-ordinate the initiative.

In its review this month of the 38 Local Enterprise Partnerships (LEPs) – the private sector-led partnerships between businesses and local public sector bodies that support local economic growth – the Public Accounts Committee of the House of Commons found that from 2015-16 to date; £9.1bn of taxpayers’ money has been awarded to LEPs through three tranches of Growth Deals. The East of England, with three LEPs, has received the least with £703m, London, with one LEP, has received £435m and the north of England, with 11 LEPs, has received most of the funding at £3.4bn (38%).

The Ministry of Housing, Communities and Local Government considers the population of an area as well as the strength of the LEP’s strategic economic plans and projects when deciding Growth Deal allocations. There are no overlapping LEP areas in the South West which means these LEPs will be able to bid for funds from the Government’s proposed Shared Prosperity Fund, which will replace EU structural funding after Brexit.

The West of England LEP has received £284m, the 12th highest in England since 2015, Heart of the South West £239m, Swindon and Wiltshire £169m, GFirst £107m, Dorset £98m and Cornwall and Isles of Scilly has received £78m. The Ministry does not evaluate the Local Growth Fund which means it has no understanding of what impact spending through LEPs has on local economic growth. The latest growth figures for the region from ESCoE showed growth at 2.1% which compared with the UK average of 1.5%.

The 24 Enterprise Zones designated in England in 2011 to improve economic growth had created 17,307 jobs by 2017 instead of the forecast 54,000 jobs by 2015. BBC-commissioned research conducted by think tank charity, Centre for Cities, also found that in two areas the number of jobs had fallen. Enterprise zones offered cheaper business rates, superfast broadband and lower levels of planning control. According to the research 5,493 jobs were created in the Bristol Temple Quarter and Bath Zone, the best performing zone in England, and 136 jobs in the Cornwall Newquay Aerohub Enterprise Zone which was less successful.

The cost of the scheme is disputed, with The Ministry of Housing, Communities and Local Government claiming £101m, £215m less than the BBC’s estimate of £316m+. The Ministry also disputes the methodology used in the research. A further 24 Zones were created in 2016 and 2017.

On jobs, Travelodge wants to open seven hotels in Cornwall as part of its £165m expansion plan which could create about 175 new jobs. The sites include Bude, Falmouth, Fowey, Newquay, Penzance, St Ives and Truro. Also Plymouth crisp company, Burts Chips, is expanding its operation in the south west, safeguarding more than 200 jobs. The firm’s upgrade of its plants at Roborough and Leicester will enable it to triple production capacity. In north Devon, a deal to build an international fishing fleet could mean 120 new jobs at the Appledore shipyard which closed in March. But Warrens Bakery, which describes itself as the oldest Cornish Pasty producer in the world, said 66 jobs within production and distribution are at risk as part of a restructuring. The firm employs around 570.

The South West records the lowest unemployment rate in the UK again but households see poor growth in their disposable incomes, and taxpayers’ hope Cosmic Girl disappears into space with their money

Reading Time: 3 minutesUnemployment in the South West decreased by 6,000 to 78,000 between February and April, a drop of 0.2% to 2.7%. This is the lowest rate in the UK; at 5.7% the North East had the highest. The UK unemployment rate stands at 3.8%.

South West average property prices fell by 0.1% to £253,410 during the month which meant annually prices grew by 1.3%. In comparison, UK prices increased by 0.7% to £228,903 during April which held the annual growth rate at 1.4%.

According to the latest figures from the ONS, the South West had the smallest increase in disposable household incomes between 2016 and 2017. The tiny uplift of 0.1% was beaten by all the other regions of the UK except Yorkshire, where incomes fell by 0.2%, household incomes in London grew by 2.2%. Nottingham has been named the UK’s poorest city, narrowly beating Leicester by £115 per household. Nottingham had the UK’s lowest gross disposable household income (wages or benefits) of £12,445. The UK average is £19,514 per household with London borough Kensington and Chelsea recording household income over £60,000 and a growth rate of 4.9% from the previous year. The South West had a gross disposable household income in the UK of £18,984.

On jobs, Insurer Aviva, has said it will cut 1,800 jobs worldwide over the next three years in order to reduce costs. Aviva has 16,000 employees in the UK and a major UK office in Stoke Gifford, Bristol. Also a Port Talbot construction company with offices in Bristol and the south-west of England has gone into administration – Jistcourt employed about 50 staff.

On interventions, £7.1m of government funding was awarded to four adjacent councils (Bristol City Council, Bath and North East Somerset, South Gloucestershire and North Somerset) aimed at increasing the uptake of electric vehicles. The new funding will add more than 120 new charging points which are being installed over the next year.

The government’s industrial strategy has resulted in investment in The University of Exeter which has been awarded £6m towards the expansion of its diabetes research centre. Diabetes research in Exeter began in 1987 and the centre is now highly regarded.

An upgrade of 1950s Bristol concert venue Colston Hall has been delayed until 2021. The venue closed last year as part of a £49m plan to redesign its interior over two years and was due to reopen in 2020. The additional cost of £3.4m has been picked up by the West of England Combined Authority.

The government and Cornwall Council are prepared to invest up to £20m into Newquay airport (Spaceport Cornwall) to make it a base for Virgin Orbit. The funding would comprise up to £12m from the council and up to £7.85m from the UK Space Agency. There would also be contributions of £0.5m from the Cornwall and Isles of Scilly LEP with Virgin Orbit investing £2.5m. Orbit is the satellite launch system being developed in the US by Sir Richard Branson which will despatch rockets to space from under the wing of a converted Virgin Atlantic jumbo jet. The public money is dependent on Spaceport Cornwall and Virgin Orbit putting together the business case. The jet, called Cosmic Girl, could be operating out of Newquay in the early 2020s if all goes smoothly.

The South West will also benefit from public funding from Historic England which will regenerate Swindon’s Railway Village in a heritage project. The area has been designated as a Heritage Action Zone by Historic England which will jointly invest £7.6m with Swindon Borough Council. The Railway Village was built by Victorian engineer Isambard Kingdom Brunel for railwaymen in the 1840s. Refurbishing the Grade II listed former pub the Cricketers’ and saving a former rail building the Mechanics Institute which has been derelict since 1986 are also part of the proposals.

On the roads, the last stretch of single carriageway on the A417 east of Gloucester, between Brockworth and Cowley, will see a new section of road through Shab Hill. The new 3.4 mile road will have a speed limit of 70mph and cost £435m. The A417 is used by motorists as a shortcut between the M4 and the M5. Radio 2 traffic news favourite the Air Balloon roundabout near Birdlip will be removed and the Air Balloon pub will be demolished. Highways England hopes to start construction in late 2021 subject to planning and funding.

A few miles to the North West, the A40 from Cheltenham to the M5 will be upgraded. The £22m project is designed to ease congestion prior to the development of a £650m cyber business park on the western edge of the town. Further plans, including adding extra lanes past GCHQ and improving cycling and pedestrian access from Cheltenham Spa railway station, will be revealed later this year. Work on the road scheme is expected to start in autumn 2019 and be completed by autumn 2021.

A proposed new town in Cornwall on the outskirts of Truro has planning permission for thousands of new homes as well as schools, supermarkets and a new stadium. Now the government has agreed to invest £47m to assist road access to it. The Stadium for Cornwall, however, – which will be home to the Cornish Pirates and Truro City FC – is still awaiting an announcement from the government on whether it will match Cornwall Council’s £3m funding for the project.