Written evidence submitted by Cornwall Council, Council for the Isles of Scilly and The Cornwall and Isles of Scilly Local Enterprise Partnership (LRS0003) Introduction Cornwall Council is a unitary authority with a resident population of 569,578 [Mid- Year Population Estimates, 2020] and an enterprise business count of 24,450 [UK Business Counts, 2019]. Cornwall is primarily a microbusiness economy with eighty eight percent of enterprises employing 0-9 employees. Cornwall only has 70 large employers with over 250 employees [UK Business Counts, 2019]. We are the largest rural Unitary Authority in England and are also the first rural authority to receive a devolution deal in 2015 on which Cornwall has been delivering a strong track record – independently verified by the Ministry of Housing, Communities and Local Government, as well as in the Warwick Economics evaluation for BEIS, due to come out this spring/summer. The Cornwall Deal has been a first step towards ‘closing the gap’ that characterises Cornwall’s position vis-à-vis national averages. By securing freedoms to design local policy solutions to the place-specific challenges of their rural and peripheral communities, Cornwall Council has delivered significant achievements, including crucial improvements to their transport infrastructure to better serve local need, the launch of a Growth & Skills Hub, and tackling the higher than average fuel poverty rate. There are 2,260 people living in the Isles of Scilly, with the lowest population density at 137 per km2. The islands have seen a population decline of 0.9% from 2012 to 2017. 25% of the population are 65+ and only 16.6% are between 20 and 34 years old. Most of the workforce both live and work on the islands, but it is difficult to attract younger families; there is a shortage of available housing, house prices are 15 times that of annual household income and 26% lack central heating. Tourism is the biggest sector making the islands very vulnerable to changes in visitor trends/demographics. The islands are also vulnerable in respect of transport; there is a single sea transport provider, the Isles of Scilly Steamship Company, and bad weather effects sea travel with a reduced service in the Winter months. For air links there are two providers, the Isles of Scilly Steamship Company provide a fixed wing service and Penzance Helicopters are aiming to provide a rotary wing option from the summer of 2020. They are also vulnerable in respect of a secure and constant supply of electricity from the grid, which is provided via a single connecting cable. The Cornwall and Isles of Scilly Local Enterprise Partnership (LEP) was launched in May 2011. Private sector-led, it is a partnership between the private and public sectors and is driving the economic strategy for the area, determining local priorities and undertaking activities to drive growth and the creation of local jobs. The LEP is business-driven and our board includes 15 appointed representatives of the private sector, 3 nominated Cornwall Council representatives and 1 nominated representative from the Council of the Isles of Scilly. Our mission is that by 2030, Cornwall and Isles of Scilly will be the place where businesses thrive, and people enjoy an outstanding quality of life. Our Local Industrial Strategy identifies the following distinctive opportunities; Clean energy resources, Geo-resources; Data and space; Visitor economy and Agri-Food. More detail on the impact of COVID 19 on our economy can be seen in Appendix 1. Executive Summary The “Levelling up” of economic performance at both local and regional level will require long term fiscal and policy decisions. There are no quick fixes or silver bullets as true levelling up will require long-term political commitment across a range of policy areas, including significant investment into economic development of areas of the UK currently lagging behind and true devolution of responsibility for delivering against the levelling up agendas to the areas that need it. A large body of recent research reports1 conclude that the current centralised system of government funding and policy design, delivery and decision-making delivers sub optimal results in terms of levelling up and addressing economic inequalities between different areas of the UK. They also all support a more localised approach with devolution of budgets and decision making to local areas as a key design principle. There are a number of cross cutting interventions from across Government purview that contribute to this levelling up. Interventions to “level” the per pupil allocation in the education system will help, over time, to ensure that attainment levels of rural and island communities (where the cost of delivery is often higher) and more deprived areas equal that of the our more affluent areas. In addition, increases in the investment in road, broadband and rail infrastructure outside the South East of England and the M4 corridor will help to ensure that all areas of England can benefit from improved connectivity to our major centres of population. However, in addition to a re-allocation of existing Government spending there is an urgent need to replace the current EU Regional and Rural Development Programmes (i.e. 2014 to 2020 ERDF, ESF, EAFRD and EMFF) and other Government schemes designed to stimulate growth (e.g. Local Growth Fund, Getting Building Fund) with a UK Shared Prosperity Fund (SPF). The SPF must be an investment of at least equal value to current EU and national funding for economic development AND must have a razor-sharp focus on economic development activity with the specific purpose of making all areas of the UK prosper by placing those areas at the heart of the decision making for this fund. Beyond this there is also the need to devolve current levels of adult skills funding to local areas as that will allow us to respond more quickly to a very dynamic labour marketplace. Our approach to this task will involve investment to unlock our potential in energy, geo resources, space, data and advanced manufacturing as well as driving best in class performance in our existing business base and renewed Town Centre and High 1 Grant Thornton’s Placed Based Growth – Unleashing counties’ role in levelling up England report; the UK2070 Commission independent inquiry into City and Regional inequalities in the UK; Joseph Rowntree Foundation research; the Local Government Association/ Localis study into “Fiscal Devolution” and the opportunity to adopt an international approach “Rethinking Local”; and The Institute of Fiscal Studies report entitled “Sharing Prosperity? Options and issues for the UK SPF” Street vitality. If the focus of the SPF is watered down to incorporate wider Government priorities, its effectiveness will be diminished. The future prosperity of the UK depends on unlocking the potential of all its areas, towns, high streets businesses and residents. Prior to the COVID 19 outbreak the OECD had already published research indicating that the UK was the nation with the greatest regional disparities (see chart below) and these are likely to increase once the true impact of the COVID 19 outbreak on local economies becomes apparent. In addition, as the maps below illustrate, regional inequality in the UK is a more complex issue than a simple North/South divide. Therefore, it is in this context that this response concentrates on the role that the SPF can play in levelling up the economy through interventions designed to stimulate inclusive growth and improvements in the productivity in areas of the UK such as Cornwall and the Isles of Scilly2 . Our key ask is therefore for a fully devolved ‘single pot’ SPF investment into our local economy of £700m over the next 10 years. The immense productivity gap that currently exists between the prosperous South East of England on the one hand and the rest of the country on the other must be therefore be levelled-up by investing in the LEP areas that are currently lagging behind. In addition, Government must recognise that for those areas that are outside the agglomeration impact of a city region, the need for an alternative to the current “trickle down” policy environment is paramount. 2 It should be noted that whilst many of the issues identified in this response relate equally to Cornwall and the Isles of Scilly the costs of delivery of any policy response are often higher on the Isles of Scilly and this fact needs to be recognised in any financial allocation methodology. The economic shock caused by COVID 19, which the OBR estimates as the largest ever shock to the UK economy3, has also hit some areas in the UK worse than others and this impact is expected to exacerbate the need for significant and sustained levelling up. The current economic impact of COVID 19 on Cornwall and Isles of Scilly is outlined below with more details available in Appendix 1. Summary Points Initial analysis pointed to a very significant impact on the majority of Cornwall’s 23,795 enterprises and 28,045 workplaces. It remains unclear how many businesses were able to survive the initial lockdown period of 7 weeks. Many businesses experienced full closure for 12 weeks, this was even longer for hospitality business which remained closed for 14 weeks and five days In the week ending 22 June many towns in Cornwall were still experiencing significant drops in expenditure. The impact across Cornwall appears to be lasting longer than other areas with many towns climbing the rankings. Most MSOA’s in Cornwall had seen a less severe impact on consumer expenditure in June compared to April. The number of people on Universal Credit rose from 24,876 in March to 48,458 in June an increase of 95%.