Kent & Medway Business Advisory Board Thursday 13 September, 8.00 – 10.30 am in the Inspiration Suite @ The Village Hotel,

Light breakfast from 7.30 am

Programme

08:00 1 Welcome and Introductions Geoff Miles, Chair

08:05 2 Review of BAB actions arising since the last meeting Dave Hughes

08:10 3 Matters arising

1) Local Growth Funding

Local Growth Funding is funding given to Local Enterprise Partnerships for projects that benefit the local economy (and produce jobs, houses or new learners).

A call for new expressions of Interest of interest closed on 31 Sarah Nurden August. A list of potential projects will be shared with BAB Members for their initial views.

2) and Medway summit with MPs

Please could BAB Members place a hold in their diaries for Friday 26 October between 15:00 and 16:30 for a meeting with the Kent and Medway MPs. The venue will be the Maidstone Studios.

08.20 3 Economic Commentary All

09:40 4 LEP Review

Government established Local Enterprise Partnerships (LEPs) back in 2010 to drive forward economic growth. LEPs are partnerships between businesses, councils, universities and further education colleges.

Kent and Medway are part of the South East Local Enterprise Partnership (SELEP). Due to its scale and a belief in subsidiarity, SELEP has four federated boards. The Kent and Medway Economic Partnership (KMEP) is the local federated boards for our area. Sarah Nurden

In August 2017, the Minister for Local Growth wrote to say the Government would review the role and responsibilities of LEPs – as LEPs would be the vehicle to deliver the Local Industrial Strategy.

In July 2018, the findings of the review were published at: https://www.gov.uk/government/publications/strengthened-local-

Kent & Medway Business Advisory Board Thursday 13 September, 8.00 – 10.30 am in the Inspiration Suite @ The Village Hotel, Maidstone

Light breakfast from 7.30 am

Programme

enterprise-partnerships

A presentation will be given to BAB at the meeting on how the changes proposed (if implemented) will necessitate reform of SELEP and KMEP. BAB members will be asked to give their views on the reforms and discuss next steps in terms of Government engagement.

10:05 The Delivery of the Industrial Strategy Following discussion at the 10 January Board meeting, David David Godfrey and Godfrey and Joe Fyans (Localis) will present headline research Joe Fyans (Localis) findings and learning for Kent.

The presentation will relate specifically to the work that Localis did for Kent and Essex.

10.20 7 Summing Up Geoff Miles

Kent & Medway Business Advisory Board Thursday 13 September, 8.00 – 10.30 am in the Inspiration Suite @ The Village Hotel, Maidstone

Light breakfast from 7.30 am

Programme

Future Meeting Dates - 2018/19

Business Advisory Board (BAB) Meeting

• Thurs 8 November 2018

• Thurs 10 January 2019 • Thurs 7 March 2019

All from 8.00 – 10.30am (with light breakfast at 7.30am) in the Inspiration Suite at the Village Hotel, Maidstone.

Kent & Medway Economic Partnership (KMEP) Board Meeting

• Mon 24 September 2018 • Mon 26 November 2018

• Mon 28 January 2019 • Mon 25 March 2019

All meetings will be held at the Village Hotel, Maidstone from 5.00 – 7.00pm.

South East Local Enterprise Partnership (SELEP) Strategic Board Meeting (all on Fridays from 10.00am – 12 noon at High House Production Park, Purfleet)

• 28th September • 7th December

• 22nd March 2019

Notes of the Kent and Medway Business Advisory Board – 5 July 2018

The Business Advisory Board meets bi-monthly and provides an insight from the business community in Kent and Medway on current trading conditions and experience of the local economy. The headline points are presented below and the full meeting note follows.

Highlights from Economic Commentary

• Staff recruitment and retention continue to be a problem for several sectors in the county, especially in financial and legal services which experience stiff competition from the capital. • Businesses in the retail sector are facing challenging times, but elsewhere there are mixed messages from small businesses. Some report that confidence levels are high although this could soon change unless there is more clarity from government about its Brexit plans. • There has been a marked increase in the number of employment tribunal claims since the recent removal of fees. • The construction sector is under pressure as materials prices rise, and skilled labour is in short supply especially for bricklayers and civil engineers. The industry is concerned that there will be further labour shortages following Brexit. • The short term nature of planning regulations can hinder growth, and local authorities need to press on with completing their local plans. • The impact of vehicle emissions on air quality is becoming a big concern, and although public transport should be seen as a solution the introduction of ultra-low emission zones in major urban areas will impact on those smaller operators with older vehicles. • The current state of the economy suggests that there could be several small interest rate rises over the new 18 months.

1. Welcome and Introductions The Chairman welcomed attendees to the meeting.

2. Review of actions from the last meeting (10 May 2018) • Apologies were received from Nick Fenton, so the actions regarding a) the planning process and b) ‘Delivering Design Quality in Kent and Medway’ were rolled forward to the next meeting.

• The Kent and Medway business summit with MPs will be postponed from 20 July to a new date, to be confirmed. Further details will be circulated once the new date is known.

• The housing growth figures shared at the ‘Planning for Future Water Resources’ workshop have been sent to Kent County Council’s officers as requested.

3. Economic Commentary

Sarah Nurden (KMEP) – Businesses and other interested parties are welcome to bid for some Local Growth Funding (LGF). Projects ought to drive forward economic growth. The amount of money available is at least £8.3m. This amount will rise if the existing LGF projects experience

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project delays, preventing their business case coming forward for approval. Full information is available at: http://kmep.org.uk/news/info-page/call-for-expressions-of-interest-capital-grant- opportunity. Sarah also asked BAB members for their permission to provide anonymised feedback from the BAB meetings to KMEP, which was granted.

Andy Davies (Handelsbanken) – The bank continues to grow, with recruitment ongoing. The bank’s construction industry customers report that they are extremely busy, especially in east Kent, with much work in the pipeline.

Bernard Spring (Chair of NKEZ) – The North Kent Enterprise Zone comprises three sites. The Maidstone site includes the Kent Medical Campus, which is progressing well with Cygnet (Mental Health) Hospital almost complete and open to patients by end of September 2018. There is planning consent for a 30,000sq ft Innovation Centre, and plans for a step-down facility at the site, for which NKEZ is looking for an operator. The second site is the Innovation Park Medway. Rochester Airport has resubmitted its planning application, which (if successful) will enable an innovation park to be built on half of the site. The third site is in Ebbsfleet. It is confirmed a modular housing factory will be erected there. Discussions are ongoing as to which part of the land will fall within the NKEZ zone.

Keith McAlister (Thomson Snell & Passmore LLP) – Another significant year of growth in business services, and commercial property is also very busy. Furthermore, the company is seeing much movement in franchise sector (particularly food and drink franchises). Staff recruitment and retention continue to be a problem, particularly bright young talent being attracted to work in London.

James Beatton (Cripps LLP) – The company continues to trade well. There are three sections to the business: a) corporate b) real estate and c) private client. The company is ahead of budget for this time of year, which is an unusual occurrence. Clients in the retail sector are continuing to face challenging times. However, anything that is business to consumer service with a high level of discretionary spend is also facing difficulties. As the news recently showed, 27% of estates agents are in ‘financial distress’. In contrast, the technology sector is particularly active , much of it fuelled by private equity. There has also been a marked increase in the number of tribunal claims since fees were removed, especially in the public sector.

Alison Palmer (Federation of Small Businesses) – FSB is reporting that confidence levels are at their highest since the start of the year. However, confidence levels will drop if Brexit plans do not come to fruition. The FSB is also noting that GDPR is creating a barrier to economic growth.

Andrew Metcalf (Maxim) – Maxim has experienced two solid months, with encouraging future prospects. Maxim’s clients are reporting a different picture to FSB, with clients expressing low confidence levels due to lack of agreements being made by the MPs on Brexit planning. Maxim is seeing growth in engagements, especially planning work, although the revised NPPF coming out later this month may affect that. The Kent Press & Broadcast Awards are a week away; 147 journalists have entered the categories. Maxim is also sponsoring the

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Kent Design Awards, alongside KCC and DHA, and BAB members were encouraged to submit entries.

Charles Buchanan (Charles Buchanan Associates) – Heathrow’s third runaway is going ahead, subject to detailed considerations. There will be legal challenges although it isn’t clear how they will be heard, which could affect the timing of development. It is notable how long it takes for infrastructure delivery, and it was the 2003 White Paper that said additional airport capacity was required. Regarding skills, Charles Buchanan has become the Chairman of the Group (East Kent and Colleges). It has been rated good with many outstanding features. The College Group is bucking the national trend on apprenticeships, with the number of apprenticeships up by 30% compared with last year. The College Group is working with businesses to grow the curriculum on offer and to meet the needs of the local economy. The College Group has formed an multi-academy trust (East Kent Schools Trust), which is looking particularly at the technical offer available for school-age children.

Andrew Clague (Clague Architects) – Reported good performance in the architect sector, and construction activity is busy in east Kent. However, the distraction of Brexit is affecting confidence levels.

Gavin Cleary (Locate in Kent) – The inward investment pipeline remains stable, which is good news. However, the type of enquiry is changing, with more enquiries from smaller companies and for smaller projects than in previous years. Locate in Kent is also working with the Turner Contemporary to instigate an event that focusses on the creative digital sectors that will run alongside the Turner Prize in 2019.

Geoff Miles (Maidstone Studios and KMEP Chairman) – As KMEP Chairman, Geoff Miles attended a ministerial visit by Greg Clark to the Port of and Eurotunnel on 29 June 2018. At the visit, the Government requested evidence and information within 7 days from Eurotunnel and Port of Dover on how they wish to resolve the customs issues. The short-term requests from Government are concerning. Also, on solutions for Operation Stack, the civil servants are telling Ministers if will take two years to build, but are not including land purchase, planning, procurement exercises, etc in the timeframe.

In relation to his business, Maidstone Studio is full and building more office space. The Data Centre is performing well. The TV side of the business continues in a similar vein to previous updates. When any new Commissioner is appointed, there is always a significant amount of change in creative direction, which causes uncertainty for production companies.

Mark Dance (Kent County Council) – Funding was secured from KMEP and SELEP for the improvements to Sandwich Railway Station. These improvements are required to allow free- flowing access to Royal St George’s Golf Club during the Open in 2020, and will guarantee three further events at Sandwich. The Royal and Ancient has committed its own funding to support the infrastructure improvements, showing its commitment to continuing to host the Open. On Brexit, KCC is publishing today a position paper, which will be circulated to BAB members. On commercial space, KCC is exploring whether a fund can be established to help stimulate the market to deliver more space to meet different needs across Kent.

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Matthew Norwell (Thames Gateway Kent Partnership) – The publication of the report by Thames Estuary 2050 Growth Commission contains a mixed bag of recommendations. The Commission’s support for the extension of Crossrail to Ebbsfleet, and for the Thames Estuary Production Corridor, is welcomed. The local authority leaders are coming together tomorrow to discuss how to respond to the report’s recommendations. The report has a focus on housing growth; there needs to be a significant investment in infrastructure to unlock this.

Sarah Dance (Sarah Dance Associates) – Emphasised the importance of building not only housing but building communities and opportunities for economic growth in tandem. Pleased that the Thames Estuary Production Corridor was included in the Thames Estuary 2050 Growth Commission report. Creative is an important sector for the region, and nationally – the three highest grossing films in the world were all filmed within the UK. Brexit may be a challenge for the creative industry, given 40% of the sector operates within the EU. Looking to the future, it would be advantageous to invest in physical spaces and digital infrastructure to support the creative sector, so the sector can exploit the export opportunities, and grow. The Kent Cultural Transformation Board has created a subcommittee to work with Turner Contemporary on maximising the opportunities for creatives to piggy-back on the Turner Prize 2019, which is being hosted in Kent.

Jo James (Kent Invicta Chamber of Commerce) – The Chamber has been very busy, particularly working with exporters, and considering the type of export documentation that will be required post-Brexit. Businesses are becoming frustrated about the lack of clarity surrounding Brexit, and the Chamber is continuing to feed local intelligence into the national network. Preparations for the Construction Expo in October are going well, with 86% of stands sold. The ‘No More Not Spots’ campaign is still running on the home page of the Chamber website, and businesses are asked to report any ‘not spots’. The Chamber welcomes the Heathrow decision and is eager to maintain the pressure on Highways England, the MPs and the Government to deliver the Lower Thames Crossing. The Chamber is supporting the Kent Design Awards. The Chamber is working with Custodian Data Centre at Maidstone, and together they have set up a technology business group. This group is for senior IT professionals and provides the opportunity for them to meet, share ideas, and listen to speakers about innovation in the industry. The cross-fertilisation of ideas arising from this meeting is very positive. The Data Centre and Chamber are being increasingly lobbied by people wanting to be involved.

Susannah Schofield (Dice Matrix Group) – The regulatory world of the Financial Conduct Authority is becoming quite terrifying for small businesses. Legislation and regulation about to come out are putting enormous pressure on SMEs, and making them vulnerable to take-overs. Also, we are witnessing that GDPR has been an hinderance to small businesses, but not to larger business. The sports world is performing well. The Premier League teams are not releasing their shirts for sale until the World Cup over. The sector hopes the World Cup will boost the economy relating to sports. Finally, Dice Matrix Group is about to enter the TV sector.

Roland Cooper (Considine Ltd) – Civil Engineering sector is seeing much activity, but also market fragility with respect to purchases. Share prices of major housebuilders are down, and future funding of new development is a concern. The construction sector is under pressure as material prices rise, and skilled labour is in short supply especially for bricklayers and civil engineers. There has been a significant change in applicants seeking a job – last year there 4

were numerous CVs received from EU applicants, this year, none have been received. The short termism of planning regulation can hinder growth, and Local Development Plans need to work. The short-term approach is evident with Brexit as well.

Hugh Evans (Quinn Estates) – The company is keen to deliver community benefits as well as housing development, for example the Herne Bay Pavilion and East Kent College Apprenticeship Centre. The recent developments at Ashford Commercial Quarter and Sittingbourne have also shown the importance of working closely with local authorities.

Barbara Cooper (Kent County Council) – The reason why councils choose to work closely with Quinn Estates is that they know that the company will not sit on the planning permission. Highways England and DTp are being urged to find solutions to delays affecting Eurotunnel and the Port of Dover, which in turn affects all roads across the county. The Highways England interim solution for dealing with Brexit and Operation Stack is currently out for consultation, which involves temporary barriers between junctions 8 and 9 on the London-bound carriageway of the M20. KCC has serious concerns about the proposal, which will affect east- west movements, and BAB were asked to consider the proposals and respond to the consultation. There are highways works ongoing at junctions 4-5, 7 and 10a of M20, and KCC wants closer integration with Highways England and DTp on roadworks. An offer was made to, and accepted by, KCC to fund an additional £2.5m for M2 junction 5; doing this would mean that Highways England would keep the scheme in its forward plan for delivery by 2022. KCC continues to invest in repairing potholes, and is currently working on an Energy and Low Emissions Strategy. The 100,000th streetlight converted to LED will be completed shortly.

Matthew Arnold (Stagecoach & Vice-Chairman of Confederation of Passenger Transport). Experienced good trading results with an increase in discretionary spend. This may be partly due to a combination of good weather and a shift to staycations instead of holidaying abroad. Stagecoach welcomes the good news about the Sandwich Railway Station Improvements, because the delays at the level crossing prevented the effective movement of buses during the Open back in 2011. In terms of challenges, Brexit is the biggest threat to transport providers. The 32 days of Operation Stack a few years ago cost the company and the transport sector a significant financial sum. While freight movement is controlled and monitored by Highways England and Kent Police, the remaining vehicles are simply left to make their own plans, which is not effective and does not help resilience. Brenley Corner is another key constraint. Recently there have been 10-15 minute delays on the east bound approach due to altered traffic light phasing. Also, a truck recently broke down at Brenley Corner that resulted in Stagecoach having to suspend service between Canterbury and Faversham. Air quality is a huge issue, and public transport must be seen as part of the solution, not the problem. Finally, the introduction of the London ultra-low emission zone means only Euro 6 standard buses can enter central London. This new rule will have a serious effect on coach operators that run services to London for commuters or tourists. The investment cycle in the sector usually runs for 10 years, and some small operators that operate Euro 4 or 5 standard businesses may struggle to adapt to the new rules, because these engines cannot be retrofitted.

Paul Winter (Wirebelt Ltd) – The export business is buoyant, particularly for trade with Ireland. The company is very close to being electricity neutral through photo-voltaics, and is arranging a visit for a couple of companies to their site. BAB members are welcome to join the visit. On skills, the 30% increase in apprenticeships achieved by East Kent College is welcome, but this is relatively small compared to what could be achieved. Many small businesses will 5

have their own internal training, but they may be put off by the training requirements for apprenticeships such as the 20% off-the-job commitment. An innovative approach can be adopted however, and BAB members were urged to get in touch if they needed help with signposting.

Stephen Kingsman (DMA Group) – Apart from the Brexit “fog” affecting the sector, many businesses are active although there is still a lot of fallout due to Carillion. The industry seems to be overcommitting itself on tender prices, which are coming down and is a worrying trend. Hopeful that the sector will pick up post-Brexit although there is a big demand for skills and not much capacity. The serviced office market is going at a ridiculous rate. The Royal British Legion Industries is raising £20m to improve the RBLI village, and this is going well. There is enormous enthusiasm for the added value for what can be achieved by the social enterprise sector.

Peter Hawkes (Furley Page) – The company’s activity levels are pretty high, especially involving commercial property, corporate work and employment tribunal work, and the company has seen profitability and turnover rise. Constraints facing the company include recruitment of personnel at all levels, and there is a shortage of premises for expansion in Canterbury. However, the company has expanded its footprint at and this has proved to be successful. Another constraint is transport between east and mid Kent using the M2, especially the pinch point at Brenley Corner. The recent litter collecting exercise was appreciated by businesses.

Carole Barron () – Professors Karen Cox and Rama Thirunamachandran will be giving a presentation to the Kent and Medway Economic Partnership about the new Kent and Medway Medical School. The universities have received many applications for the Director of the new Medical School. The new Director will have to have a clinical background. Professor Karen Cox and Dr Mohamed Sakel (of UoK) have both been named among the NHS’s most influential staff members as part of its 70th Anniversary celebrations. Also, the University of Kent has been awarded a grant of £50,000 to run a series of events for digital start-ups. The money, from the Santander Universities' Enterprise and Entrepreneurship Fund, will run Digital Reboot - a series of activities and business collaborations to meet the growing demand for digital start-up business support and enhance the employability skills of those looking to work within the sector. This is good news for the university, as only 11 universities across the UK received that money.

Phil Eckersley (Bank of England) – There is much noise in the data making it difficult for the Committee to analyse and then set interest rates (for example, the beast from east, the royal wedding, the recent spell of warm weather). The job of the committee is to extrapolate the data and it is having to fall back on more soft data as usual, such as the information supplied today by BAB members, which appears to indicate there is an element of resilience in the economy. There is a feeling that near-term CPI inflation may rise, as energy companies respond to higher oil prices and the sugar tax impact is felt. There is a hope that after this increase, inflation will go back to 2%. On interest rates, the Committee’s long-term rhetoric if for gradual and limited rises. It could change, but the current economy suggests there could be two or three small interest rate rises over the next 18 months.

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Additional Commentaries Paul Thomas (Development Land Services) - Affordability is still an issue in the housing market, especially affordable rents. This is compounded by escalating estate management charges for maintaining public open spaces, landscaped areas and unadopted roads. Obtaining implementable planning consents and adequate services provisions are still causing delays in site starts. The push for offsite construction, whilst a government objective, is being hampered by procurement rules, and Homes England acting more as a commercial enterprise and their recruitment aren’t assisting. A couple of Kent local authorities are at least considering small pilot schemes, albeit a slow process. More concerted efforts are required to get into delivery rather than the current academic talk shops.

Jane Ollis (Institute of Directors) – The institute is happy with overall growth in employment figures and is taking the reduction in wages growth seriously. This does mean that skills gaps are opening up and businesses are struggling to recruit talent in sectors from agriculture through to financial services. However, confidence remains generally high and this will be boosted when Brexit arrangements become clearer.

4. The Industrial Strategy – Exploiting the Opportunities (Carole Barron, Director of Innovation & Enterprise and Simon Barnes, Industrial Strategy Manager, University of Kent)

A copy of the presentation by Simon Barnes is available on the KMEP website. In introducing the presentation, Simon explained that the university’s driving force is to create a “state of preparedness” for competitive funding and, by building on its strengths and how these align with the local economy, it is developing a map to assist in understanding the wider opportunities for its departments afforded by the government’s Industrial Strategy. It was also keen to work with other universities and businesses.

5. Any Other Business

Carole Barron said that the recent KEIBA awards event on 21 June had been a great success, thanks to the efforts of Kent Messenger Group and Kent County Council.

The next meeting of the Business Advisory Board is on 13 September.

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