Levelling Up the Great South West: a G7 Legacy Contents
03 Foreword 04 Executive Summary 05 Chapter 1: Devon and Cornwall — challenges and opportunities 06 Chapter 2: Our Levelling Up Analysis 12 Chapter 3: Case Studies 15 Chapter 4: Policy Recommendations 16 Endnotes
2 Pennon Group plc Levelling Up Devon and Cornwall: a G7 Legacy Foreword
Susan Davy CEO, Pennon
With life in Britain gradually returning to This vision is one shared by Pennon, the These kinds of initiatives are Pennon’s normal, the political conversation is turning largest private sector employer in the region. contribution to what should be a huge joint to the Government’s main policy priority: We have 2,000 colleagues and support effort between national and local government, levelling up. Over the next few months there another 5,300 through our supply chain. We the private sector, and the third sector to will be lots of competing voices attempting have a unique role to play in supporting the transform our connectivity infrastructure, to define what the policy means and what it lives of people and the places they love. Now release investment into our high-growth should look like. that the Government is embarking on radical sectors, and boost the skills of the entire plans to reduce regional inequality across region. The post-Covid moment could be a This report is Pennon’s contribution to that Britain, that means ensuring the South West once in a generation opportunity to level up debate, commissioned on behalf of the Great secures the vital investment it needs. our region: here in the South West, we stand South West. By analysing all parliamentary ready to deliver. constituencies in Devon and Cornwall on Our recommendation is clear: levelling up six key indicators of social and economic cannot focus only on the North and Midlands. wellbeing, we have shown the unique We must transform levelling up into an challenges and the major opportunities facing integrated national project, with economic the South West. Our hope is that this report growth plans for every region incorporated can be a springboard to further action — into a central framework. powering our region to a high-tech, high- growth, green British future. We’re backing up our calls with action. Our Green Recovery Initiative is focused on The analysis shows that while the South opportunities to make an even bigger and West has a reputation as a relatively well-off better societal contribution, with projects region of the UK, and while crime is generally focused on improving public health, low and life expectancy is high, all but two protecting the environment and addressing of the 18 constituencies in the country’s two climate change. It will provide much needed most south-westerly counties are below the investment and support the creation of up to England and Wales average on spending 500 regional jobs up to 2025. It’s an example power, a measure of productivity which takes of a private sector driven plan which will into account employment rates and average benefit the wider supply chain and provide wages. opportunities for South West Water’s existing workforce to gain new green skills. Yet the region’s potential is huge. It already has much to build on: a natural environment That’s on top of the work we’re doing on which is the envy of Britain; a tourism trade our jobs and skills programmes: we were which makes up around a quarter of regional one of the first companies to sign up to GVA per year; the second highest regional the Government’s Kickstart scheme; our employment in the creative industries outside apprenticeship programme has a target of London and the South East; a thriving 500 apprenticeships over the next five years; aerospace and manufacturing sector; and we are very proud of our newly launched huge opportunities for sustainable energy graduate programme which intends to offer generation; and an increasingly innovative 100 roles by 2025. agri-food industry.
Pennon Group plc Levelling Up Devon and Cornwall: a G7 Legacy 3 Executive Summary
The aim of this report is to demonstrate the levelling up needs of the Great South West, looking primarily at the two counties of Devon and Cornwall; to outline the specific challenges affecting the region; to analyse the disparities existing within both counties; and to put forward policy recommendations which could support their economic development.
● ‘Levelling up’ is now the central more in need of levelling up than Devon, concrete plans: our Green Recovery commitment of the Government’s policy but both Plymouth seats and Torbay are Initiative will support the creation of up to agenda. Much of the political conversation more in need than anywhere else. 500 additional jobs across our regions over around levelling up has focused on the the next four years and provide further so-called ‘Red Wall’ of formerly Labour-held ○ We find that the rural factor is a major opportunities for South West Water’s seats in the north and midlands of England. cause of the low productivity levels in the existing workforce to gain new green In reality, however, all regions of Britain region. Despite promising clusters in a skills. We are also bringing young people have specific socio-economic challenges diverse advanced manufacturing sector, into the business through the Kickstart, which can be addressed by Government Devon and Cornwall tend not to benefit apprenticeship, and newly launched policy interventions. from the agglomeration effects present in graduate scheme. other counties with large conurbations or ● Devon and Cornwall is South West Water’s with better transport connectivity. ● As we move into a post-pandemic primary coverage area, and the two recovery, Government and the private counties have their own set of challenges ● Our analysis shows that what has sector will have to work closely together and opportunities to be solved and happened to many areas in the South to create the conditions in which new and unlocked by Government policy. However, West is very similar to much of the established sectors can thrive sustainably policies that benefit them will ultimately northern ‘Red Wall’. There are pockets of while protecting the natural environment. benefit the whole Great South West region. deprivation across both parts of the two Transforming levelling up into a truly Despite strong and nationally-leading counties: low productivity areas with low national project with a long-term strategy sectors across the two counties there are wages and a fragmented employment integrating economic thinking from every also major challenges on productivity, low market, many still dealing with the effects nation and region of Britain could have a pay, and pockets of deprivation, particularly of deindustrialisation and low levels of both real impact. Outlined below is our five-step in urban and coastal areas. private and public investment. Looked at on policy programme for central Government socio-economic indicators alone it would be to support the economic development of ● In order to better understand these difficult to tell apart many ‘Red Wall’ towns Devon and Cornwall and leave a lasting challenges, we have created a levelling up from those in coastal areas of the South legacy for the wider Great South West analysis of both counties at a parliamentary West. region: constituency level. ● However, there are plenty of opportunities 1. Transform levelling up into an ● The data shows two major patterns: for boosting growth, including an exciting integrated national project, with array of sectors making up a high-potential economic growth plans for every ○ The first is a clear divide between Devon advanced manufacturing cluster. British region incorporated into and Cornwall and the rest of the UK in a central framework. These plans terms of productivity. This divide cannot ● The combination of the natural environment should be delivered by regional be overstated. Cornwall and the Isles of and environmental science specialisms leaders with regional accountability. Scilly has the lowest productivity of any in the region means Devon, Cornwall and UK subregion — and by a long way – the wider South West could set its sights 2. Establish a Transport for the South 32% below the national average and an on becoming Britain’s greenest regional West body with similar powers to outlier even amongst the bottom quartile. economy, turning global concerns over Transport for the North, able to Devon, while better, is still the seventh sustainability into locally-led economic champion transport infrastructure lowest productivity area in the UK. growth. projects across the region.
○ Using historical productivity data, our ● Devon is home to one of the fastest- 3. Deliver ultra-fast South West 5G analysis finds that on a ranking of growing IT clusters in the UK, with the mobile, fibre and wireless broadband all parliamentary constituencies by number of sectors in the cluster having through to 90% of the population by productivity 13 out of 18 Devon and grown by 36% since 2010, creating over 2030. Cornwall constituencies are in the 2,000 jobs. Agri-tech contributes over £750 highest priority category. million to Devon’s economy each year 4. Expand the now-doubled public and the county has seen a 367% increase RD&I budget in every British region, ○ This is in contrast to the Government’s in environmental consultancies and prioritising the South West’s portion own levelling up categorisation, which businesses since 2010. in the advanced manufacturing and includes only three South West local environmental science clusters. authority areas in its priority group. ● Cornwall is similar: 27% of the county is Put simply: many places in Devon and recognised as an Area of Outstanding 5. Commit to opening up more STEM Cornwall rank consistently among the National Beauty, and the county has a pathways for students in higher and lowest growth areas in Britain. higher proportion of energy, geo-resources, further education. The Government’s and marine businesses than the rest of the current pledge to increase the number ○ The second pattern is the gap between UK, all high-productivity sectors which rely of students taking STEM subjects constituencies within Devon and on the natural assets of the region. is very welcome and should be Cornwall. The findings point to a general accelerated. rule with a major exception: Cornwall is ● Pennon is backing the South West with
4 Pennon Group plc Levelling Up Devon and Cornwall: a G7 Legacy Chapter 1: Devon and Cornwall in the Great South West — challenges and opportunities
Live local and prosper Value Added) have meant both counties being If we are to tackle regional inequality, then we On 11 May 2021, Her Majesty the Queen set overlooked for investment for a number of will have to address low economic growth in out the Government’s domestic policy agenda years. Over time, this has led to a widening the rural South West. The good news is that at the state opening of Parliament. Central to and well-documented economic gap between we already have a firm foundation on which the speech was a plan to level up the country, Devon and Cornwall and London. Despite to build: a natural environment which is the allowing British people to “live local and a strong sectoral base across the two envy of Britain; a tourism trade which makes prosper”, no longer being forced to move out counties there are also major challenges up around a quarter of regional GVA per year; of their hometowns to find decent jobs with on productivity, low pay, and pockets of the second highest regional employment in high pay. deprivation, particularly in urban and coastal the creative industries outside London and areas. the South East; a thriving aerospace and Levelling up is now the central commitment manufacturing sector; huge opportunities of the Government’s policy agenda. While Thankfully, the region’s strategic economic for sustainable energy generation; and an it doesn’t have an official definition it is plans show the action and intent necessary increasingly innovative agri-food industry. nevertheless aimed squarely at reducing to rectify disparities and build on the strong But all of this potential will require unlocking regional inequality and boosting productivity foundations created by the joint working of through persistent and large-scale investment, outside London and the South East. local government and regional business. as well as the freeing up of supply side But there is always more to do. After the constraints. If the principles of this agenda were important pandemic, central government also has a before Covid-19, they are now essential. real opportunity to deliver lasting change If the Government’s levelling up agenda is While much of the conversation around and economic growth in partnership with the to have the impact necessary to transform levelling up has focused on the so-called people of Devon and Cornwall and all others economic growth and productivity in every ‘Red Wall’ of formerly Labour-held seats in in the Great South West region. . nation and region of Britain then it cannot the north and midlands of England, in reality focus solely on post-industrial areas of the all regions outside London have specific Over the next few months, the Government North and Midlands. What is necessary is a socio-economic challenges impeding their will be setting out in clearer detail its plans comprehensive industrial and economic plan economic growth which can be addressed to level up Britain. This report is a major part which caters as much for Devon and Cornwall by Government policy and all have been of Pennon’s contribution to that conversation as for places like West Yorkshire and the impacted by the pandemic. and to the plans to ensure the G7 Summit Tees Valley. This report argues for such an taking place in June creates a lasting legacy expanded definition of levelling up and gives The counties of Devon and Cornwall are no for the region. exception. Historic government investment Government the tools to implement it in our decisions based on national GVA (Gross region.
Pennon Group plc Levelling Up Devon and Cornwall: a G7 Legacy 5 Chapter 2: Our Levelling Up Analysis
A complex picture The furlough figures show this most clearly: (IMD) (a lower score is better on this While much of the Great South West may the chart below shows the number of people indicator). have a reputation as a well-off region of furloughed by South West local authority with Britain, in reality the picture is far more Devon County Council and Cornwall Unitary ● Crime – the crime rate for each area (a complex. We have decided to focus on Devon Authority first and third highest respectively, lower score is better on this indicator). and Cornwall, the counties which make up furloughing 158,000 people between them. South West Water’s primary coverage area. ● Health – based on both number of GPs The figures speak for themselves. Productivity Giving Government the tools to level up per 1,000 patients and life expectancy for in Cornwall is the lowest out of all regions in However, while the pandemic has had an each area (a higher score is better on this England,1 aggravated by low wages despite outsized negative impact on the economies indicator). high employment levels. Devon has its own of Devon and Cornwall, it did so partly due to problems: productivity here lags well behind the underlying weaknesses already present. ● Empty commercial properties – based on the national average and the county has In order to better understand these socio- commercial vacancy rates (a lower score is poor transport connectivity. Across Devon, economic challenges, we have created a better on this indicator). the population as a whole is growing, but the levelling up analysis of both Devon and In weighting the indicators priority should working age population is declining as a share Cornwall at a parliamentary constituency be given to the first two, spending power of the total.2 On top of all this, both counties level. This comprehensive socio-economic and financial dependency. The first of are experiencing an exodus of young people breakdown allows us to take a deep dive into these, spending power, can be interpreted to larger urban areas, particularly London, the specific challenges facing the region and as productivity and gives a sense of the with 70% of 15-17 year olds in Cornwall to paint a nuanced picture of where specific economic growth prospects for an area. High saying they will need to leave the county in policy interventions could lead to substantial or low productivity is particularly important order to obtain a good job.3 and lasting change. when considering a region as opposed to a The Covid-19 pandemic has complexified We have compared all eighteen parliamentary city or town; it is likely to have causes which and complicated these trends. The rural constituencies in Devon and Cornwall against go beyond local conditions and to which South West is a regional economy heavily the England and Wales average (EWA) on six regional economic strategies are an important reliant on sectors including aerospace and indicators which aim to show the social and solution. Financial dependency shows an tourism, both of which have been severely economic strength of an area. area’s dependence on state benefits and impacted by shutdowns. In January 2021 it ● Spending power – combines employment gives a sense of the likely employment was revealed that unemployment in Devon rate and average salary to show consumer challenges and the resources available to and Cornwall had increased by 138% in and economic strength (a higher score is local areas to rectify them. just twelve months.4 And despite having better on this indicator). Our analysis aimed to bring out this complex the second-lowest rate of Covid-19 of any picture of a region in clear need of levelling English county, Devon’s increase in JSA ● Financial dependency –combines up but also facing unique challenges. In our claimants has been far higher than elsewhere, Job Seekers’ Allowance rate, Universal summary below we have pulled out the key increasing by 180% compared to a national Credit rate and educational attainment regional insights for each indicator and then average of 117% in August 2020.5 Numerous rates to show an area’s current and likely proceed to give a high-level analysis of the think tank reports throughout the past year dependence on state support (a lower region as a whole. have predicted that of all areas in Britain, score is better on this indicator). Devon and Cornwall will be particularly hard hit by the economic impacts of the pandemic ● Deprivation – deprivation score based on over the long-term.6 the English Index of Multiple Deprivation
Figure 1: Number of people furloughed by South West local authority