What Does Budget 2020 Mean for the Heart of the South West Economy?

“The largest sustained fiscal boost in 30 years” with a large proportion being spent on infrastructure and support for business is welcomed by the Heart of the South West LEP, and we’re waiting for further detail on how it translates specifically to our area.

The biggest commitment we received from Chancellor Rishi Sunak’s Budget 2020 is the promise to dual one of the main arterial routes into the area – the A303 – including a tunnel.

The LEP and other regional stakeholders have been campaigning for this for years; so it’s long-overdue and extremely significant. However disparate connectivity in this area for road, rail, air and broadband must be accelerated to reverse decades of under- investment and deliver a truly national levelling-up agenda.

An important part of the Budget is the Government’s response to sustain businesses and employees through the COVID-19 emergency, with particular help for small businesses, SMEs and those in retail, leisure and hospitality through loans, grants and business rate relief. This has a large impact areas such as HotSW that have a high proportion of small and micro-businesses and those in the tourism sector.

We also welcome the announcement of an extra £10m nationally for Growth Hubs; and £387 million nationally in 2021-22 to continue with existing priority Local Growth Fund projects, as a down-payment ahead of the Government’s Comprehensive Spending Review (CSR) in the summer.

We understand that further announcements in the CSR will see decisions on how much investment LEPs will get via the Shared Prosperity Fund in future to replace EU funding.

Other announcements from the Budget relating to business, skills and the economy in the HotSW area are:

  • A focus on clean growth and clean energy – we have our part to play in increasing the UK’s contribution to clean energy via Hinkley, carbon capture and increasing the volume of solar and wind power that can be sent to other parts of the country via the national grid.
  • Investing in Skills, particularly via Further Education (£1.5bn over five years) HotSW has an excellent FE sector and a large proportion of our students gain skills at the NVQ levels provided by FE.
  • £95m to invest in high quality T-levels, including construction, digital, and health and science – priority skills sectors in HotSW
  • The aim to reach a National Living Wage of 2/3rds of mean earnings by 2024 for workers over 21 is important in parts of Heart of the South West where pay is below the national average, and also important from the point of view of employers.
  • An emphasis on sustaining and developing rural, agricultural and fishing sectors through tax cut exemptions, digital connectivity, flood resilience and coastal erosion measures.
  • Increasing R & D investment to £22bn a year by 2024/5 is good for an economy such as HotSW that has strengths in innovation and is part of the Science Innovation Audit pilot.
  • Investment in NHS and public services benefits areas such like HotSW that have a higher-aged demographic and a large percentage of NHS and other public sector workers.
  • Aviation tax adjustments may impact on regional airlines’ commercial sustainability for the region.
  • Plymouth will benefit from investment in a new bridge under the Transforming Cities fund; a successful bid for the £3m from the Local Full-Fibre Networks Challenge Fund.
  • Digital connectivity investment in hard-to-reach areas – which includes parts of HotSW.
  • DIT increasing advice for exporters – the south west being one of three regions focussed on.
  • A freeze on cider, beer and wine duty will benefit our local producers.
  • The nature for climate fund to protect natural habitats and plant new trees can help us preserve our distinctive natural assets – a key aim on the HotSW Productivity Strategy.
  • More than £600bn to be spent on roads, rail, broadband and housing by the middle of 2025 is said to be the largest capital injection in infrastructure for generations. It’s the LEP’s duty to harness the right level of funding for our area so that we can reach our economic potential and help the Government gain a significant return on their investment.
  • With our partners in in the Great South West consortium, we’ve asked for £2m seed-funding to build a robust business case to leverage an even wider, regional increase in prosperity across the region, so we await further detail from Government.

Karl Tucker, Chair of the Heart of the South West Local Enterprise Partnership said:

“We’ve been campaigning for the dualling of the A303 for years, so we’re delighted to get final commitment from this Chancellor and look forward to getting clarity about when this project will go live; however what we need to see next is a holistic approach to our whole transport network that invests in rail resilience, wider road network resilience and addresses our recent loss of air connectivity with the collapse of FlyBe.

“As an area with a high proportion of small businesses, the measures to support enterprises through the Covid-19 emergency are welcomed and will be particularly beneficial to our local enterprises – our Growth Hub reports a high number of people contacting them for advice. There’s a lot in this budget about rural economies, particularly on improving broadband, flood resilience and the exemption from fuel tax relief abolition for agriculture and fishing.

“On the whole, we welcome Budget 2020 – the largest sustained fiscal boost for 30 years – but we need to know where our share is on the Government’s levelling-up agenda; so we look forward to working with the treasury on the detail on how this translates directly to investment in the Heart of the South West and the Great South West over the coming days and weeks.

“We’re ready and willing to increase our contribution to UK plc – levelling up has always been key to our agenda and is central to our forthcoming Local Industrial Strategy which we believe is soon to be backed by Government.

“To quote the Chancellor: “More investment and growth means more jobs and higher wages” this concept is central to our Productivity Strategy that aims to create higher value careers and raise prosperity for all.”

Rebalancing the UK’s Economy is our prospectus outlining how the Heart of the South West aims to level-up and increase our contribution to UK plc. The Heart of the South West Local Industrial Strategy is soon to be published jointly with Government. Progress statements and the evidence base on which it has been written are available here.

On the wider Great South West geography which includes the LEP areas of Cornwall and the Isles of Scilly and Dorset, we’ve outlined our asks and opportunities for increasing the region’s contribution to the economy by £45bn in the Prospectus: Securing our Future. We and our partners in the Great South West await further clarity on how the Governments Levelling-Up agenda will harness the opportunities across Dorset, the Heart of the South West and Cornwall and the Isles of Scilly; and well as potentially the wider south west region.