CEDOS September 2022 Newsletter
Secretary’s Statement
Welcome to the post summer CEDOS newsletter and a chance to reflect over the events of the summer. People re-reading this in 2023 will probably faint in disbelief when I say the summer in Staffordshire has been hot and balmy, more like Tuscany than the Midlands! People up and down the county are seriously contemplating turning their sheds into a summer house and bar as the hosepipe, lawnmower and paddling pool increasingly look redundant pieces of equipment in climate change Britain.
Normally the summer is a relatively quiet period. Parliament closes, Whitehall goes into stasis, and everyone takes some well needed time for relaxation and reflection before the rush from September into Christmas. This summer has been as far from the above reality as could be possible. As a result, the ED ‘policy wonks’ amongst us must have all have developed acute RSI from all the briefings we have been churning out.
We now live in a time, perhaps more so than any recent decades, when what is dubbed in the media as a crisis genuinely is a crisis. I think in local economic development we are still grasping how we can both react to the rapidly changing events of the here and now, but also try and make sense of this rapid period of transition and try and plan for a better, brighter future. The economic challenges facing households and businesses are probably the greatest, at least in Staffordshire, since the rapid de-industrialisation of the 1980s.
Poverty and hardship are generally words that have been on the fringe of the economic development profession. Any tools to combat the prevalence of poverty have not been directly within our gift and are generally indirectly influenced by creating better jobs or improving skills.
Work has been seen as the way to combat low-income households and has largely been the core focus of attempts to improve quality of life. Our work with the voluntary and community sector has largely been in this sphere also. Much of the focus of economic development has been on the ‘positive’ and creating ‘opportunities’ for self-improvement through progression in the labour market.
COVID-19 and the current cost of living crisis have seen growing in-work poverty, a trend that was already growing pre-pandemic and that, as late as last autumn (driven by increasing wages in a tight labour market) seemed to be abating as an issue.
As with many aspects of the UK and indeed global economy at the moment, a few months later and that is all change. The furlough scheme and other COVID support, Council tax rebates and one-off fuel bill payments seem to be a creep of expanding unofficial in and out-of-work benefits for many families. The link between being in work, poverty and contributing to national income and taxation pool seem to be blurring – despite still falling unemployment and rising wages.
As the summer heat fades and the colder days approach, yet another existential question is raising its head for the economic development profession. Further juggling looks needed to support the short term to preserve long-term opportunities.
I suggest the policy folk amongst us top up on our red bull and ibuprofen gel stocks…there are more crisis briefings to come by the looks of it.
Matthew Shufflebotham, CEDOS Secretary and Economic Development, Staffordshire County Council
A message from the Chairman on forthcoming changes to CEDOS membership
I would like to inform you of some changes to the way CEDOS plans to invoice current and new members for this financial year. As an organisation we are entirely dependent on the contributions of our members to undertake all activities of the network. Over the past 12 months, the Executive Team feel we have moved our offer to members forward considerably in terms of quality and relevance (with some excellent Lunch and Learn sessions, the development of our forums covering areas such as the Community Renewal Fund and the UK Shared Prosperity Fund, our informative newsletters and policy reviews and our recent research into the Future of Economic Development).
In order to ensure we have the financial stability to continue to offer meaningful and relevant services to current and future members, we plan to change the way CEDOS membership is administered. We would like to provide the opportunity for members to sign up for and pay for a two year membership. This will reduce the administrative burden on both CEDOS and member Authorities, who have to raise purchase orders for the relatively small membership fee. It will also provide longer term stability for CEDOS. As previously informed, we will be increasing our membership fee to £750 per annum after several years of no increase, which still offers excellent value for money.
We would also like to reiterate that CEDOS membership is a corporate membership, open to any relevant officer within your Authority. You will shortly receive a membership form from Warwickshire County Council, the accountable body for CEDOS, indicating your options for your CEDOS membership, along with the opportunity to update the officers you would like to be on our mailing list.
I would like to thank you once again for your continued membership and hope to see you soon at a future CEDOS event.
Justin Brown, CEDOS Chair and Assistant Director for Growth – Lincolnshire County Council
New Government Formed
After a long summer of hustings, the Conservative Party leadership race is now over and Liz Truss has been confirmed as the new Prime Minister. After the first day in office the new Cabinet and ministerial team are in place, with Jacob Rees-Mogg MP as Secretary of State for Business, Energy and Industrial Strategy, Simon Clarke MP as Secretary of State for Levelling Up, Housing and Communities and Chloe Smith MP as Secretary of State for Work and Pensions.
CEDOS are keen to stress that the Levelling Up agenda does not get lost within the wider agenda of tackling rising costs and the energy crisis. The mention of Levelling Up as a priority at dispatches at Prime Minister’s questions is hopefully a positive sign. Support for households with the cost of living during this period is critical, but we are keen to see support for the many struggling businesses up and down the country, which is seemingly forthcoming.
As always Local Government stands ready to work with our local businesses and communities and ensure any support packages receive the maximum uptake and are effective.
We also look forward to engaging in a new energy policy for the UK and understanding how local areas can contribute to a secure and sustainable energy future, whilst balancing creating economic opportunities for our local populations and protecting local communities and the environment.
Finally, approaches to devolution need to continue apace, but provide local areas the opportunity to adapt to the changing landscape and plan and collaborate in an effective manner. Any new funding and investment streams need to be streamlined and trust the decision making and management capacity of Local Government.
Lunch & Learn Network Event Recap – 15th July 2022
We are hugely grateful to Tony Wilson, Director of the Institute of Employment Studies, for leading our last Lunch and Learn session in July. The session, titled ‘Where have all the workers gone’, explored ongoing changes within the labour market as the economy rebounds from COVID-19 and adjusts to the challenges of the growing costs of living. For a copy of Tony’s slides, please click here.
Forthcoming CEDOS events
CEDOS Lunch and Learn Session – 23th September 2022
Our next lunch and learn session will be held virtually at 12-1pm on the 23 September, with a contribution from Chris Henning, Executive Director for Place at Derbyshire County Council. The session will focus on the ongoing devolution agenda, with Chris providing input from Derbyshire County Council’s perspective on the recent East Midlands Devolution Deal and the process of developing a new East Midlands Combined Authority.
CEDOS Community Renewal Fund Forum
Every first Monday of the month (at 12pm) CEDOS will be facilitating a forum to discuss issues and share practical solutions and best practice around the development and delivery of the Community Renewal Fund. The sessions will be open to members and Local Authority non-members and will now run until January 2023, at the conclusion of the fund.
Future dates for the Community Renewal Forum events will be on Monday 3 October , Monday 7 November and Monday 5 December.
CEDOS UK Shared Prosperity Fund Forum
CEDOS are also hosting a drop-in forum on the UK Shared Prosperity Fund on the same format as for the Community Renewal Fund. The forum, which helps partners share practice, ideas and information on the UKSPF is held every second Monday of the month at 12pm.
Future UK Shared Prosperity Fund Forum events will be on Monday 12 September, Monday 10 October, Monday 14 November and Monday 12 December.
If there are any specific requests for events that members would like CEDOS to host, we are always happy to consider suggestions from members for stand alone events. If you have any suggestions, please contact info@cedos.org.
Summer 2022 Devolution Deals
The summer has seen progress on the preparation and signing of a number of Devolution Deals and a potential stalling of some remaining deals. August 2022 has seen the signing of deals with York and North Yorkshire and Derby, Derbyshire, Nottingham and Nottinghamshire (East Midlands).
Levelling Up and Devolution as an agenda has been somewhat side lined during the Leadership debate, with the focus being on the cost of living crisis, an impending recession and the NHS. We hope this short term vigour will be injected into the remainder of the devolution process outlined in the Levelling Up White Paper. The areas still outstanding that have been invited to negotiate a deal include Cornwall, Devon, Plymouth and Torbay, Durham, Leicestershire, Norfolk, Hull and East Yorkshire and Suffolk.
It is unclear now on the detailed timeline of the remaining proposed County Deals within the Levelling Up White Paper and also the expanded powers for some of the existing Mayoral Combined Authorities. The speed, slant and approach taken by the new Prime Minister and their cabinet will have a significant bearing on how economic development and regeneration is delivered sub-regionally and will be a key focus for CEDOS over the coming period.
The Cost of Living and Local Economic Development
As has frequently been the case during and after the COVID-19 pandemic, markets have quickly changed and extremely dramatically. In mid-2020 the price of crude oil became negative due to a slump in demand, whilst in the spring this year it hit record new highs. The war in Ukraine has impacted on global food supply, sanctions have impacted heavily on fossil fuel prices and the wider conflict and legacy of the pandemic have affected a range of supply chains. These geopolitical factors have been further exacerbated by drought and heatwaves in Europe, with the UK now facing eye watering inflation rates not seen since the mid 1970s.
This all occurring with record rates of employment putting upward pressure on wages. According to ONS, the claimant count of out of work benefits claimants fell further (albeit slightly) in August to 4.9% of the labour force, with falls continuing since the start of the conflict in the Ukraine.
The national (and indeed global) policy response has been rising interest rates, trying to balance choking off demand to drive inflation down with the need to ensure recession is avoided – although most commentators agree this now very unlikely. National policy makers are trying to encourage restraint in wage settlements to avoid endemic wage driven inflation.
This is while the debates for the new Prime Minister have focussed on driving economic growth and reducing the cost of living, two things that are not easy to achieve simultaneously.
In localities this is having a number of significant impacts on an already fragile post COVID-19 recovery.
Households are facing huge spikes in the cost of energy, an ongoing trend pre-pandemic that the war in Ukraine has now super-charged. Household expenditure is already contracting in face of these headwinds, which is reducing the amount of disposable income in the economy and is resulting in expenditure and consumer habits changing rapidly. The cost of living and rising interest rates is a real crisis in low and even middle income households and has led to the announcement today of a massive Government intervention.
Businesses do not have their energy prices capped and the spiralling costs are likely to be far starker for businesses than domestic customers. The most prominent sector in the media that is likely to struggle has been the retail and hospitality sector, already struggling with rising wage costs and in many cases a post-pandemic debt burden. It is anticipated a package of support for businesses will be announced imminently.
Already a number of physical ‘demand restrictions’ have been brought in across Europe already, such as limiting air conditioning usage in France and public buildings in Hannover turning off hot water for showers and handwashing. There may also be gas rationing across Europe this winter. These outcomes cannot be dismissed in the UK either.
Large gas (and gas derivative) using industries such as manufacturing, transport, primary industries, agriculture, food and drink and of course…..electricity generation are clearly the most at risk.
As interest rates rise, slowly the burden of repayment instalments will increase and short term debt servicing will become an issue for more and more businesses. Many businesses have significantly impaired balance sheets after COVID-19 which may well restrict their ability to borrow further (at an increased cost).
Local Services are also likely to struggle with rising costs, much of the coverage to date has been focussed on swimming pools, but many schools are changing hours, working from home is likely to be continued and the health issues from poorly heated homes are likely to increase pressure on an already stretched NHS.
The short term spike in costs, coupled with reduced demand for goods and services from businesses and households is likely to have a strong negative impact on local economies across the country.
Nationally, there is a trade off between providing direct support to keep the economy functioning and ensuring the UK has a sustainable borrowing policy and the solution to the energy crisis is not a stoke for further long term inflation in itself. As this newsletter is being written, the pound is at its lowest against the dollar since 1985.
The recently announced package of financial support for households (8 September) will be followed up by a package of support for businesses – although the scheme for businesses may be more complex as there may be targeting and tariffs are not covered by any OFGEM cap.
Government intervention and policy is likely to be the main route out of the crisis and grasping any opportunities in terms of public support packages and investment in a rapidly changing energy policy are likely the main route of opportunity for economic development activity in the near term. We have previously covered the increasing role the energy sector will play in local economic development and a role for public bodies in facilitating this. The solutions include developing new energy sources, improving local smart grids and reducing wastage during transmission, insulation and waste minimisation in businesses, households and transportation.
Partner Bulletin
The What Works Centre for Local Economic Growth are currently looking for examples of places that have changed a policy or project based on looking at evidence. Examples can be credited or anonymised– it’s important people share what hasn’t worked in the past. If you would like to contribute a case study please follow this link for more information.
The Centre are also running logic model training on 10th October. It is aimed at people who haven’t had much experience with logic models. If organisations sign up as a group of 5-6 they can work through a live project in their own breakout session, otherwise we use anonymised examples in mixed groups. More information on the event is below:
CEDOS on LinkedIn
CEDOS are delighted to launch our new LinkedIn company page for members to share links, news and commentary. LinkedIn is the world’s largest professional network and we look forward to engaging with current and prospective members on the platform. To follow and post please visit https://www.linkedin.com/company/cedos/