September Chair’s Blog

September 30, 2022

By the time you read this it may already be out of date. There’s such a surfeit of news it’s difficult to keep up, but I’ll try my best.

So where are we as I write? High inflation, falling demand, energy crisis, higher borrowing costs, rollercoaster markets, plunging pound, bond buy-backs, a rebuke from the IMF, mortgage products pulled, Covid loans falling due. It’s difficult not to be gloomy.

The fact is the new Government has bet the house on growth and needs to borrow billions of pounds to finance tax cuts (and energy price caps) announced in the last few weeks.

Ministers are pushing the accelerator on the economy by using tax cuts to stimulate demand, while the Bank of England is trying to stomp on the brakes by raising interest rates to rein in inflation (and at the same time buying billions in debt).

Meanwhile the markets don’t think the sums add up, causing the value of the pound to plunge and a rise in the cost of Government borrowing. Little wonder that commentators have been talking about a ‘doom loop’.

All of this causes huge uncertainty for businesses and consumers. Whether you’re importing goods or trying to work out your next mortgage payment, it has become almost impossible to predict where we are heading.

But in the immediacy of these crises, we must not lose sight of the longer-term aspirations for the economy of Cornwall and the Isles of Scilly.

What these shocks teach us in part is the increasing need for security of supply across a range of industry sectors, whether that’s our energy, food (we still import 36% of what we eat), or critical materials.

We can never be totally insulated against economic shocks, nor should we be insular, but we can look upon some of these momentous events as an opportunity to strengthen our economy.

Now more than ever we need to do everything we can to unlock the potential of new and emerging industries, particularly renewable energy as part of the transition to a net zero economy.

I was heartened therefore to see the Government’s Growth Plan make specific reference to accelerating the deployment of commercial floating wind energy projects in the Celtic Sea. As a LEP we have long championed this opportunity as one that could bring thousands of jobs to Cornwall and the South West.

Encouraging too was the suggestion that Falmouth Docks could become one of a number of new Investment Zones in Cornwall designed to accelerate growth. Falmouth is likely to play an increasingly important role in the development of offshore renewables in our seas.

Newquay Airport could also become an Investment Zone, building on its existing Enterprise Zone status which has helped create the UK’s first Spaceport. LEP investment has backed the creation of the Spaceport and we look forward to its first satellite launch in the coming months, which will be a momentous event for our region.

The Government has also recognised Cornwall’s role in providing the critical minerals necessary for so much of modern technology, including lithium, tungsten and tin. All three are on the UK’s Critical Minerals List, and all three are found in abundance beneath our feet in Cornwall.

This week I addressed the Cornish Mining Conference in Falmouth where the topics of conversation included the world’s insatiable demand for technology metals and how they can be responsibly extracted.

Cornwall’s resources are globally significant and an essential component of the energy transition. By 2040 the world will need four times as many critical minerals for clean energy technologies as it does today.

But if that’s where future growth is going to come from then we need to have the building blocks in place to support these emerging industries. That incudes an ambitious plan to improve skills because the UK has seen the biggest drop in employment through the pandemic in the G7. We can’t even fill the jobs we have have now, let alone those of tomorrow.

That’s why the LEP’s Employment and Skills Board has been analysing the supply and demand requirements for different sectors, including green jobs and the digital economy, with more sectors planned. And it’s encouraging to see both the mining community and floating offshore wind industry working closely together to map what those needs will be, not just from a skills perspective bit also from the investment, regulatory and environmental perspective.

We are also working pan-regionally across industry groups, neighbouring LEPs and local authorities as part of the Great South West initiative to promote the region as ‘The UK’s Natural Powerhouse’ in the green and blue economy.

In July the Government awarded the partnership £1.5m of core funding to advance a business case to Government for sustained investment, and that can tie in closely with the ambitions of the UK’s Growth Plan.

But in the short-term, it’s critically important that we make every penny count in terms of intervention. Cornwall and the Isles of Scilly has been allocated £132m over three years from the Government’s Shared Prosperity Fund, with the first investment decisions expected in a matter of weeks. It is vital that those investments are allowed to flow as swiftly as possible into our businesses and communities.

Mark Duddridge is Chair of the Cornwall and Isles of Scilly Local Enterprise Partnership.