Paper E – Appendix 1 Appendix 1: Draft Budget representation Dear Chancellor Budget 2020 – Levelling up the Humber In response to your invitation for Budget representations, we are pleased to set out the priority areas which would enable us to implement our ambitious local industrial strategy at pace. The Humber local industrial strategy was agreed across Government in October, after being accelerated by the Business Secretary in response to the insolvency of British Steel, and is ready to be launched. It focusses on three areas where the Humber has distinctive opportunities: Accelerating clean growth – transforming the UK’s highest-emitting industrial cluster into a more productive net zero carbon economy, building on the progress we have made in establishing the UK’s leading offshore wind cluster. Developing the Humber ports and manufacturing clusters – increasing the value the UK’s largest ports cluster brings to the economy by attracting more value-adding manufacturing activity. Expanding our knowledge economy – building on recent business R&D investments to step up innovation activity in the Humber, creating more higher-value jobs linked to our strategic opportunities in clean growth, ports and manufacturing. The strategy would support the long-term competitiveness and productivity of the Humber economy, an area which has historically underperformed. Despite recent progress the area has a legacy of pockets of high deprivation and there are some communities, particularly in urban areas and on the coast, which have not shared in the proceeds of national economic growth. Nowhere is more relevant than the Humber to your aim of levelling up the UK. The focussed approach that we have developed with Government will directly contribute to achieving this. We set out below how you could support us to move forward with this at pace through Budget 2020. Humber priorities Decarbonisation of the Humber region With the highest emissions and the necessary natural resources, the Humber is the UK’s biggest decarbonisation opportunity. We are working with businesses that share our ambitions and will, if the policy and regulatory environments are right, be prepared to invest substantially to contribute to achieving them. However we need to take action across our economy and want to move forward with this quickly. As set out in our industrial strategy, we are seeking Government support for the development of an exemplar special purpose delivery vehicle for delivering projects in support of the “whole place” decarbonisation of the area. This would have the required focus, expertise and capacity to undertake a transition on the scale required in the Humber. It would have a dedicated budget and the ability to enter into commercial partnerships, borrow and re-invest the returns on its investments. A Development Corporation could be a suitable way of achieving this. 1 Paper E – Appendix 1 As the UK prepares to host COP26, establishing an innovative regional decarbonisation vehicle such as this would demonstrate the Government’s commitment to reducing emissions in its largest industrial cluster, and act as an example for other nations to follow. We welcome your manifesto commitment to investing in energy efficiency for homes, schools and hospitals. Our experience, such as from Building Schools for the Future, has shown that managing multi-site multi-year construction schemes of this scale locally can deliver better outcomes – achieving high value for money whilst developing local skills and supply chains with a long-term legacy. Drawing on this experience, we would like to pilot an ambitious local energy efficiency programme from your new fund. Working across sectors and with local training providers, we believe that managing this locally would deliver greater social as well as carbon benefits on a larger scale and more quickly than a national provider could achieve. Humber Freeport The Humber Enterprise Zone predominantly covers sites linked to the Humber ports. It has brought new manufacturing jobs and businesses to the area, and we have prioritised it for infrastructure investment – including through borrowing for the South Humber Industrial Investment Programme (SHIIP). However, the last remaining business incentives are coming to an end, meaning that it will be difficult to sustain inward investment on this long- term pipeline of sites. We would like to work with Government to explore the benefits of establishing a Humber Freeport on sites around the Humber Estuary, building on the legacy of our Enterprise Zone. This should prioritise non-operational port/airport land capable of attracting new manufacturing jobs, combining the advantage of proximity to the Humber ports with incentives and infrastructure investment to overcome the market failures that persist in our area, caused by low development returns and high abnormal costs. Establishing a Freeport on the Humber could also contribute to levelling up the UK’s trade flows, which are too heavily concentrated in the southern ports with all the consequent impact on congestion. It is important that freeports are aligned with local industrial strategies and avoid local displacement effects. We also recognise that there will be many ideas put forward and believe that local leaders are best placed to prioritise and decide on what is most appropriate for their areas. All regions with ports should be able to put forward proposals equally to be judged on their merits. Therefore, we recommend that in England LEPs should be invited to propose and manage freeports, as has been the case with enterprise zones. Transport infrastructure The A63 Castle Street upgrade in Hull has been the city’s number one transport priority for decades, as it is vital for relieving congestion on the strategic road network to the port and reuniting the city centre with its waterfront. The Examining Authority issued a Recommendation Report to the Secretary of State on Highways England’s application on 24 December 2019, meaning that a decision must be made by March. We hope for an early positive decision, and would like to see confirmation in Budget 2020 that the funds are available for the scheme to begin construction this year. Rail freight is crucial for relieving road congestion and reducing transport emissions. We prioritised investment through our Growth Deal to upgrade the line between the Port of Immingham and Doncaster, which can now accommodate the large hi-cube containers, but 2 Paper E – Appendix 1 restrictions remain west of Doncaster and from the Port of Hull. We would like to see further priority given to rail gauge clearance and capacity improvements to enable more freight to be carried across the Northern Powerhouse by rail. The UK’s legacy inland waterways network has untapped potential for carrying more heavy freight, such as aggregates, directly to city centre locations – reducing carbon emissions and congestion. However, the handling facilities are not all available to accommodate this. We recommend restoring the freight facilities grant, with priority given to low carbon transport, to support modal shift and complement the investment that will take place through Freeports. Humber Bridge Next year will be the 40th anniversary of the Grade I listed Humber Bridge opening. The Bridge is a remarkable feat of British engineering, a vital economic link between the two banks of the Humber Estuary and an important part of the UK’s strategic transport infrastructure. We would welcome the Government’s support to help us deliver a fitting celebration of the Humber Bridge’s construction and the impact it has had. We can demonstrate a track record of delivering successful cultural events, particularly through Hull UK City of Culture 2017. The Government wrote off part of the Humber Bridge’s construction debt, caused by historic high interest rates, in 2012, enabling the tolls on the Bridge to be halved. Since then, journeys across the Bridge have increased by 50% and now total over 9 million per annum. Our analysis shows that most of these are commuters, with the reduced tolls opening up new employment, business, learning and social opportunities and supporting housing growth. However, the Bridge still has spare capacity, with the annual commuting cost of £720 remaining a disproportionate barrier to people accessing work in our lower-wage economy, which in turn constrains the region’s economic growth. Tolls ended a year ago on the Severn bridges, joining those in Scotland. In England, most tolled river and estuarial crossings are in areas that experience higher deprivation, lower earnings, slower growth and lower productivity than average. These act as a brake on local economies, limiting movement of workers and access to opportunities. We recommend that Government launches a review of current tolled crossings to consider the potential benefits of reducing or removing tolls, and how the ongoing maintenance of these integral parts of the UK’s road network can be fairly funded in future. Levelling up innovation We welcome the Government’s commitment to rebalancing R&D expenditure. We have made progress in recent years with globally-significant investments totalling over £200m by international businesses including RB, Smith & Nephew and Croda. We want to go further in developing our higher-wage knowledge economy, and put forward two priority projects linked to our industrial strategy: The Offshore Renewable Energy Catapult is developing an Offshore Wind Operations & Maintenance Centre of Excellence, to be based in Grimsby. A range of unique facilities are proposed, which would position the UK to lead the technology and process innovation required as larger turbines are deployed further out to sea. It is important this progresses quickly to ensure the UK does not sacrifice the early lead it has in the O&M sector. 3 Paper E – Appendix 1 The University of Hull and Humberside Fire & Rescue Service have developed proposals for Ark, a National Flood Resilience Centre1. This would create a unique training, testing and research facility with a full-size street scene that would improve the UK’s readiness for and ability to respond to flood events.