To update Cabinet on the progress of the ten South East Wales local authorities, in partnership with the Welsh Government, in developing and securing a City Deal with the UK Government. 

The Chief Executive presented an update on the progress of the ten South East Wales local authorities in partnership with the Welsh Government in developing and securing a City Deal with the UK Government.  He stated that the report should have been submitted in his name and not that of the Corporate Director Communities and deleted reference in the report to Appendix 1, the contents of which had been encapsulated within the report.  He also drew Cabinet’s attention to the financial implications in the report wherein the sum for the fund scenario should have been £1.28 billion and not £1.28 million. 

The Chief Executive reported that Cabinet at its meeting on 14 July 2015 authorised participation in discussions to take forward the Capital City Region concept and the Great Western Cities initiative including the contribution of up to £47k towards the participation of a City Deal bid for Cardiff and South East Wales.  It also supported the preparation of a regional growth plan, based on an update to the South East Wales Strategic Framework. 

He reported that the ten local authorities are at the early stage of negotiating a Cardiff Capital Region City Deal with the UK and Welsh Governments, comparable to the Glasgow City Region.  He stated that a £1.28 billion submission had been presented to the UK Treasury, supported by the First Minister for the development of a City Deal.  The submission was based on the need to adopt a new approach to improving economic outcomes in South East Wales to attract higher levels of investment to address productivity per capita in Wales being the lowest in the UK.  He stated that a City Deal and Infrastructure Fund could provide a mechanism to unlock growth potential through targeted investment.  The Cardiff Capital Region had set itself the target of 5% per annum in Gross Value Added over an initial 10 year programme which equated to net increases of £200m per annum. 

The Chief Executive reported that the basis of the City Deal with the Treasury would focus on delivering ambitious economic growth targeted on Connectivity; Digital; Innovation; Skills and Business Support.  In order to deliver the above the Cardiff Capital Region will seek new powers and fiscal flexibilities.  He stated that a joint letter had been submitted by the ten South East Wales local authorities supported by the First Minister to HM Treasury proposing a £1.28 billion fund over ten years with contributions of £580m from the Welsh Government; £120m from the 10 local authorities and £580m from the UK Government. 

The Chief Executive informed Cabinet that the City Deal concept is predicated on a Payment by Results (PbR) approach and local authorities borrowing on behalf of the UK Government the funding required for it to invest £580m.  Under this scenario the Welsh Government would also provide a £580m contribution to the Fund in the form of additional capital investment or capital grant and not predicated on a PbR approach.  The model also assumed that the ten local authorities would make a capital contribution to the Fund of £120 million, which for this Council would amount to £10.8m if based on a population share. 

He stated that the next steps were to focus on the three key foundations of the City Deal, namely Real Economy Prioritisation; Establishing Governance and Metrics and Establishing Funding Parameters.  Final decisions would be made on these projects by the 10 local authorities in partnership with the Welsh Government in July 2016. 

The Leader in commending this approach believed the benefits would outweigh the risks associated with the proposal.  The Cabinet Member Adult Social Care and Wellbeing welcomed the initiative by the local authorities in taking forward the Capital City Region concept.

RESOLVED:                     That Cabinet:

(1)  Noted the progress to date and the estimated timescales to get the full agreement of all parties to complete the City Deal

(2)  Noted that a further update report would be presented to Cabinet in the New Year.