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TRANSFORMING the SOLENT PRODUCTIVITY and GROWTH STRATEGY UPDATE February 2017 Access to the Port of Southampton

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TRANSFORMING the SOLENT PRODUCTIVITY and GROWTH STRATEGY UPDATE February 2017 Access to the Port of Southampton TRANSFORMING THE SOLENT PRODUCTIVITY AND GROWTH STRATEGY UPDATE February 2017 access to the Port of Southampton. More CONTENTS FOREWORD recently, Highways England have published a discussion paper: The Road to Growth which presents an outline of its research findings and Global Influences and sets out their proposed approach to supporting the National Context ....................... 4 Since the agreement of the Solent Growth Deal, we have been economic growth. The LEP will proactively Solent LEP Supporting Local engage in this discussion to secure strategic Productivity and Growth ................. 7 working hard to help this world-class area achieve its full potential. highways investment to improve the This is vitally important at this time as it is clear that the change in our connectivity of the Solent. Solent’s Productivity relationship with Europe will bring some uncertainty in the short term, and Growth Challenge .................. 10 but it will also open up new opportunities for business. In addition the completion of the Solent Area review offers a fresh opportunity to build on International Trade the work to date to realise the talents of our and Export Growth ....................... 12 We have assessed what capabilities we will 2015/16 including new investment in our key residents whilst supporting the development of need to deliver growth and prosperity in the transport interchanges, the delivery of two our employment and skills base for the future. Building on Our Assets ................. 13 future in the Solent and we will focus our new world class skills facilities in the area, The Solent LEP has been in the vanguard of A Productivity and Growth investment on activity that will help to give improvements in our road system to address skills support, working in partnership with our Agenda for the Solent ................... 15 businesses and individuals the support they some of the barriers to connectivity across Universities and the FE sector to deliver three need to respond to these new challenges. the area, unlocking new development land for new world class skills centres and a new centre Priorities for Solent LEP ................ 24 employment and housing and the construction of excellence for Cancer immunology in the Our five point plan is clear and we must: of a new global Centre of Excellence for Cancer area since 2013 and we look forward to Governance and accountability ..... 26 Immunology. In addition we continue to support building on this work in 2017. • Address deficits in infrastructure, most our SME business base and our small business pronounced in transport, also in flood growth programme has directly supported 130 Finally as we start 2017 we will be working defence and superfast broadband, and local businesses including the creation of over on a new Economic Strategy for the area. the infrastructure required to unlock 70 new start-ups. Furthermore, Solent LEP The Solent economy has come through new development opportunities and local partners have worked together to a challenging period in economic history look at the joint planning and delivery of a from the financial crisis in 2008, through the Address the serious and chronic • new transport investment plan. recovery in 2012 to the recent outcome of the shortage of housing in the Solent area. referendum to leave the EU. It is therefore a We are pleased to see some early results from good time to refresh the Strategic Economic • Develop the skills that our economy needs this work with the very timely publication of the Plan (SEP) for the area. We would like to start to succeed, with a continued focus on higher Solent Transport Investment Plan in 2016 level skills, apprenticeships and STEM. this refresh by opening up a discussion with which will allow the area to respond positively key local stakeholders (including local business, and proactively to the new investment Ensure that ideas and knowledge are at academia and the public sector) to shape a • opportunities under the National Productivity the forefront of our approach working with vision for the Solent Economy going forward. Investment Fund announced under the Autumn our world class universities to support our This vision needs to provide a clear statement Statement in November 2016. businesses to innovate and grow. for the future of the economy so that the Solent is positioned to respond to the opportunities We are also pleased to see the announcement Address the economic challenges across and challenges ahead. We look forward to • by Highways England in September 2015 of the Solent area working with our partners in the coming year major upgrades to the Strategic Road Network as we move forward with work on the over the next five years, including enhancing Achieving this ambition requires the area new strategy. to create conditions that support growth. capacity on the M3 between Winchester and The progress we have made during the first Southampton, enhancing capacity on the year of the Solent Growth Deal is a strong M27 between Southampton and Fareham testament to the area and our ability to through SMART Motorways, a comprehensive deliver on this. The £151.9m Solent improvement to the strategic freight route Growth Deal agreed with Government has interchange at Junction 9 of the M3 with allowed the area to deliver a number of new the A34, and junction improvements around Southampton on the M27 and M271, improving Gary Jeffries infrastructure and skills capital projects in Solent LEP Chairman 2 FOREWORD FOREWORD 3 1 Source: HM Treasury lower business investment and household in productivity since the financial crisis, (2016) Autumn Statement 2016 spending to weigh on GDP in the near term. which has exacerbated the long-standing Lower business investment is expected to gap between the UK and the most 2 The OBR highlights that there is a higher exacerbate the weakness in UK productivity productive nations - our competitors. than usual degree 2 of uncertainty in that is persistently holding growth down. these forecasts. More recently, the new Government has The UK has a long-standing productivity identified that central to their plans to tackle gap with other major advanced the UK’s productivity underperformance will economies. In 2015, UK labour productivity, be through the development of an Industrial as measured on an output per hour basis, Strategy. Whilst further detail is awaited, was 18 percentage points below the average the Industrial Strategy will be about boosting of other G7 countries; 35 percentage points productivity, creating good jobs and delivering below Germany; and 30 percentage points economic growth. below the US. UK labour productivity growth remains subdued, as in most advanced The Industrial Strategy is expected to consider economies. The average rate of productivity and position the UK to be at the forefront growth across Organisation for Economic of what is referred to as the fourth industrial Cooperation and Development (OECD) revolution. It is characterised by increased countries fell to 0.9% between 2010 and automation of working practices, effecting both P&O Britannia Cruise Liner Entering Port of Southampton 2014, compared with 1.8% in the five years low and middle skill jobs, greater connectivity, before the financial crisis. Although UK machine learning and developments in new productivity growth increased slightly to and emerging technologies, occurring at a 0.9% in 2015, this is less than half the considerably faster pace than in preceding GLOBAL INFLUENCES AND average growth rate experienced before industrial revolutions. THE NATIONAL CONTEXT the financial crisis. The Government has set a clear agenda to raise productivity in the UK and see this as the central long-term economic challenge facing The global economy remains subdued, posing continued challenges the country. Productivity determines living standards in the long term and improving it is for the UK economy. Global growth was 3.2% in 2015, the slowest the key to increasing wages. If the UK raised pace since the financial crisis. However the UK is forecast to be the its productivity by one percentage point every fastest growing country in the G7 in 2016 and economic activity grew year, within a decade it would add £240 billion 2.3% in the year to Q3 2016. to the size of the economy. The government’s approach to raising productivity, set out in the 2015 Productivity Plan, is based on: Advanced economies grew 2.1% in 2015, factors such as the continued weakness while emerging economies grew 4.0%, of the Eurozone, and a general slow-down • encouraging long-term investment in the fifth consecutive year of slowing emerging in the global economy that has contributed economic capital, such as technology, economy growth. China’s growth has slowed, to the widening of the trade gap. Domestically, innovation, infrastructure, and skills; and as policymakers seek to move to a more slowed investment, ongoing reductions sustainable growth path, but, like in India, in government spending and inventories • creating a dynamic economy which ensures growth remains well above the global average. contributed to disappointing growth in 2015. resources are put to their best use. It is expected that the UK will face a period of Despite this, the UK is forecast to be the uncertainty, followed by adjustment. Reflecting Despite the dynamic political and economic fastest growing country in the G7 in 2016 this, the Office for Budget Responsibility (OBR) landscape of the past 12 months, the and economic activity grew 2.3% in the year forecasts that GDP growth will slow to Government does not consider that to Q3 2016, whilst the employment rate is at 1.4% in 2017, and then recover to 1.7% the fundamentals that underpin the 2015 a record high of 74.5%. However, this growth in 2018, 2.1% in both 2019 and 2020, Productivity Plan have changed. There was weaker than forecast and reflects external and 2.0% in 20211.
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