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Final Report September 2018

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Final Report September 2018 Final Report September 2018 www.cpier.org.uk The Cambridgeshire and Peterborough Independent Economic Review (CPIER) The Economic Review is the product of the Cambridgeshire and Peterborough Independent Economic Commission. This Commission was established by the Cambridgeshire and Peterborough Combined Authority (CPCA) in June 2017. It is chaired by Dame Kate Barker, and its other members are: Dr David Cleevely CBE, Sir David Arculus, Dame Carol Black, Matthew Bullock, Professor Diane Coyle CBE, Mark Dorsett, Warren East, Professor Alan Hughes, Professor Andy Neely, John Shropshire OBE and Lord David Willetts1. Its terms of reference were agreed at a Board Meeting of the CPCA, and are as follows: The Cambridgeshire and Peterborough Independent Economic Commission (IEC) will: • Develop an authoritative evidence base on the economic performance and potential of Cambridgeshire and Peterborough and its component parts that commands attention at the highest levels of government; • Reframe thinking about devolution within the UK policy debate – exploring the potential for devolution to unlock growth and improve social outcomes in multi-centred economies as well as in England’s core and key cities; • Provide impartial advice and guidance, on an ongoing basis, on the performance and growth of the Cambridgeshire and Peterborough economy; • Inform choices on policy priorities and strategic investment that are made locally, at the Cambridgeshire and Peterborough level, at national level and at European level; and • Foster a common understanding of the future development of Cambridgeshire and Peterborough’s economy and the long term drivers for change across local partners, Whitehall, and Ministers. The IEC will provide a robust and independent assessment of the Cambridgeshire and Peterborough economy and its potential for growth. This will provide the evidence base on which Cambridgeshire and Peterborough partners, and partners at national level, can continue to build a collaborative approach to growth and devolution. As part of its early work, the panel will carry out and publish a detailed review that will include: A full economic baseline study; • Economic forecasting to determine the potential impact of various scenarios over the next ten years and how the Cambridgeshire and Peterborough economy could respond to these; • An assessment of whether the Cambridgeshire and Peterborough economy is fit for purpose and its future economic potential; 1More information available at www.cpier.org.uk/about-us/Commissioners/ • Analysis of how partners’ investment in key drivers of growth (e.g. key towns, key sectors, key infrastructure) across Cambridgeshire and Peterborough could maximise long-term returns for all areas; and • An analysis of the impact that the devolution of key economic powers and levers could have on economic output and productivity. This is that review. An interim report was published in early May 2018, and this final report builds upon that work. In producing this review, the Commission set itself the following nine questions to answer: 1. How important is Cambridgeshire and Peterborough for the regional and national economy? 2. What are Cambridgeshire and Peterborough’s regional, national and international links? 3. How far can economic activity that occurs in Cambridgeshire and Peterborough be shown to be net additional to the UK economy, rather than just displacement? 4. Do other growing cities like Cambridge and Peterborough share common characteristics, problems and infrastructure requirements and what can we learn from them? 5. How does Cambridgeshire and Peterborough achieve continued prosperity and high growth rates? 6. How equitable is growth across the whole of Cambridgeshire and Peterborough and what strategies should be adopted in future to address this issue? 7. What types of infrastructure and other investment would best enable Cambridgeshire and Peterborough to achieve its full growth potential and contribute to regional and national economic growth? 8. How should Cambridgeshire and Peterborough describe its uniqueness or brand to attract further investment from government and the private sector? 9. Are there any policy and planning recommendations which arise from the answers to these questions? These questions have guided our work, and shaped this, the final report. Preface It is my pleasure to introduce the final report of the Cambridgeshire and Peterborough Independent Economic Review (CPIER). This has been jointly funded by the Cambridgeshire and Peterborough Combined Authority (CPCA) and Cambridge Ahead. The views in the report are those of the Commission. This Review is very timely. It comes at a critical time not just for this area, but for the UK as a whole. At a national level, the outcome of the Brexit negotiations remains uncertain; but this outcome will be a key factor shaping the economic and business environment. In the Combined Authority area, the southern part is feeling the adverse effects of past rapid growth in terms of congestion and high housing costs, alongside the benefits of a high employment rate. At the same time the more northern and eastern parts have been growing steadily, but issues remain with lower incomes, poorer educational achievement and weak transport links. The creation of the Combined Authority offers the opportunity to support the local economy through this period of adjustment and to set out an ambitious vision for the future focused on improving incomes and well-being across the whole area. It is vital that the steps proposed and actions taken are based on sound evidence and command widespread support. This report aims to provide the former. Not all of the recommendations in it are addressed to the Combined Authority – some are for national government, others for local authorities and importantly we look to business to play its part not only by raising its game on productivity, but also improving the picture with regard to the health and well-being of the workforce. Over the past year the Commission has sought to get under the skin of this area – gathering evidence and meeting people, businesses, local councils and of course the Mayor. Alongside this we have conducted new research into past employment growth across the area, produced a qualitative survey of business opinion and carried out innovative modelling to set the scene for debate on future plans. In our interim report (www.cpier.org.uk/interim-report) we set out our understanding of the area’s economy. We have not attempted to give definitive answers on future growth rates or on infrastructure priorities -these are for further debate. However, we have reached the clear conclusion that recent employment growth rates have been rather stronger than indicated by official figures, and we believe that the area can continue to deliver rapid growth with the right support. The Combined Authority area sits at the confluence of two important growth corridors – the East-West arc presently planned from Oxford (Cambridge–Milton Keynes–Oxford Arc), and The UK Innovation Corridor / London-Stansted-Cambridge-Consortium. The Combined Authority area today accounts for only 1.28% of UK population and 1.37% of UK Gross Value Added (GVA), but that understates its importance. We consider that the aim of doubling GVA in this area by 2040 is realistic, and will be achieved in part by attracting knowledge-intensive businesses which would not locate elsewhere in the UK. Success here is of national significance. But it will only be attained if there is more ambition with regard to the development of new housing, and a careful prioritisation of infrastructure projects. In addition, such a stretching target will depend on improved collaboration between all local partners, public and private. In this high growth phase it will be vital that new development is done not just well, but in an exemplary fashion. The attraction of the Cambridge area comes in part from the pleasant environment. We cite examples of good placemaking from elsewhere which demonstrate that if transport and new housing are well-planned, then economic, social and environmental benefits can all be achieved. However, a particular challenge here is to ensure that these new places also foster the personal networking that has been so important in Cambridge’s growth, and needs to be more prevalent throughout the area. The national importance does not mean it should be directed from the national level. Rather, we strongly believe that the local knowledge base and innovation of the Combined Authority mean that more powers need to be devolved to the local level in order to monitor and support the economy in a way which will improve the quality of life right across the area. We set out our thoughts on this, and on the importance of the decision-making at the appropriate level within the Combined Authority area. Fiscal devolution also means greater financial responsibility. There are considerable financial resources available to the Combined Authority, and with the right investment and delivery bodies in place, private finance could be attracted to develop the substantial pipeline of projects set out in the Mayor’s vision. I am very grateful to all of the Commissioners for their time, their input and their guidance. Work at the Centre for Business Research and at the Department of Architecture at the University of Cambridge has brought novel approaches which we hope could also be of value elsewhere. The Management Board, Technical Board, and Secretariat have provided invaluable support throughout. In addition, the work of Metro Dynamics in pulling together the review has been tireless and brought a vital outsider perspective. The whole team would like to thank the many people who have met us, who have made submissions and helped create the final document. This review stage is now concluded, but the Commission itself hopes to continue to serve Cambridgeshire and Peterborough. Dame Kate Barker 6 CONTENTS Contents Executive Summary 8 1. Overview of the Area 21 1.1 Historical Context 22 1.2 Political Context 23 1.3 Economic Context I - Growth 24 1.4 Economic Context II – Economic Geography 26 1.5 Market Towns 30 1.6 Natural Assets 31 2.
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