The Government's negotiating objectives: the White Paper Contents

Annex 5: Note of meetings in Truro, Cornwall, 9 February 2017

Introductory meeting with local council and LEP

Councillor John Pollard

Leader of Cornwall Council

Kate Kennally

Chief Executive of Cornwall Council and Chair of the CIOS Futures Group,

Mark Duddridge

Chair of the Cornwall and Isles of Scilly (CIOS) LEP

The Committee were presented with background on Cornwall and its economy, noting in particular that Cornwall was still recovering from historical declines in its industrial base, most significantly in extractives and china clay. As a result, the population was suffering from intergenerational disadvantage, particularly in terms of fuel poverty and a high economically inactive population. The local authority also faced the additional costs of maintaining the coastline. Members were told that Cornwall’s story was about “building foundations from a low starting point.”

The Committee heard that Cornwall’s key strength lies in minerals and energy. Although only 0.002% of the world’s land mass, over 90% of the world’s minerals by type are found in Cornwall. The Committee were told about recent discoveries of lithium in Cornwall, the biggest source in Europe. Cornwall had also begun work in geothermal and two applications have been received for EU funding for test sites for geothermal. At present, 40% of energy needs in Cornwall are met through renewable sources and there is the potential for Cornwall to become 100% self-sufficient. The most pressing obstacle to this is infrastructure as Cornwall can’t presently get all the energy it produces into the National Grid. So far, investments in energy have been through EU funding.

The Committee also heard that Cornwall is investing in aspiration through Falmouth University, and improvements in social care and schools. Cornwall’s population is skewed towards those of retirement age, as many leave the area at 18 and don’t return until 40. However, through investment in homes, better paid jobs and the university they are hoping to keep more people in Cornwall and balance the population profile of the area.

By virtue of Cornwall’s dispersed population, Members were told that businesses tended to be small (84.2% of which are micro enterprises). Employment levels are rising but Cornwall continues to be a low wage economy (earnings 77% of national average at £17,873) and productivity is the lowest of all LEP areas. EU funding had significantly improved the digital connectivity of Cornwall, with superfast broadband aiding the development of the second fastest software development hub in the UK.

Members were told that Cornwall’s competitive advantage lay in digital, agri-technology, marine technology, low carbon and renewable energy and space and aerospace. It was noted that the fishing industry were a small but vocal part of the local economy.

In the wake of the referendum, the Council began work to look at Brexit. On 15 July, they held a Brexit summit to understand what was on residents’ minds. The Bishop of Truro attended the summit to consider societal issues, particularly as there had been a spike in hate crime following the Brexit vote. The Futures Group was established at the summit to look at the risks and opportunities of Brexit. A key area of work has been on EU funding, with £633m of funding at risk from leaving the EU. It was suggested that the results of EU funding had not been publicised enough. It was also noted that Cornwall was determined to move away from dependence on structural funding and that Brexit could be an opportunity to influence future economic policy for the regions.

The Committee also heard about Cornwall’s devolution deal and efforts to maintain the momentum of devolution following the referendum.

Roundtable with local businesses

Mike Carr

MD, Pendennis Shipyard Limited

Ross Williams

CEO, Creative Kernow

Julian Cowans

Superfast Cornwall

Paul Trebilcock

Chief Executive, Cornish Fish Producers Organisation

Ruth Huxley

Managing Director, Cornwall Food and Drink

David Walrond

College Principal, Truro and Penwith College

Prof Geoff Smith

Senior Deputy Vice-Chancellor, Falmouth University

Helen Childs

Interim Chief Operating Officer, NHS Kernow

Paul Massey

Director, Bluefruit Software

Ben Gowers

Director, BG Renewables

Helen Coley

Regional Organiser (Cornwall), GMB Union

The main concern raised by participants was recruitment if the UK limits freedom of movement of EU workers. Recruiting non-EU staff was described as “too burdensome”. One participant told Members about hiring a worker from India who had had to return during the project while a mistake in his paperwork—stating his job title was a developer rather than a programmer—was corrected.

Businesses did talk about “growing their own” pipeline of staff and working with educational institutions on building skills, but that this would require significant investment and would take time. Some with highly-skilled workforces had invested in training and apprenticeships but still needed EU workers to fill gaps. For lower-skilled jobs, businesses said they needed EU workers to do the jobs which the local workforce were not prepared to do. It was noted that Cornwall could suffer in terms of productivity and skills without access to EU workers. Members also heard that Cornwall relied heavily on EU funding for skills.

Educational institutions were concerned about their EU staff and students and asked for a simplified visa scheme. They said that “talent” should be taken out of net migration debate.

The fishing industry said that Brexit was an opportunity for home-grown talent and would create a more “economically buoyant” industry. It was suggested that fishing was part of the “social fabric of Cornwall” and needed a better deal than they had had as a member of the EU. It was noted that 77% of fish caught in UK EEZ is caught by non-UK fleets and the reestablishment of a 12 mile limit would be achievable and would give UK fishermen a “fairer share” of fishing opportunities.

Members heard that investment in superfast broadband and in Falmouth University had led to more people staying in Cornwall. It was noted that superfast broadband had benefitted from EU structural funding and that the digital agenda for Europe was more ambitious than UK plans, raising concerns about further funding once the UK leaves the EU. However, it was mentioned that outside of the EU, the UK would no longer be bound by state aid rules.

Renewables was described as an emerging sector in Cornwall which has benefitted from EU funding. That industry now needed certainty in terms of energy policy in order to secure investment. Low carbon energy was identified as important to Cornwall but developments in that area had stalled due to a lack of grid capacity. If they could secure investment, Cornwall could be a leader in energy storage.

Brexit was considered an opportunity for the region to tackle its weaknesses such as low pay and skills.

Uncertainty, particularly around what a free trade agreement with the EU would look like and how long it would take to agree, was affecting business and investment decisions. It was suggested that “uncertainty is almost as bad as what the outcome may be”. There were concerns that the UK had become non-inclusive, which had created a certain amount of unease. While others said that prejudices were colouring how realistic people were about opportunities and that uncertainty was being used as an excuse to avoid dealing with different questions around Brexit.

Opportunities to address procurement law and tendering were raised by a number of sectors, for example in the health service and in energy. Members were told that the UK imported too much energy from Europe, especially off-shore wind. It was noted that some countries had subsidised their energy sector and were benefitting from that. It was suggested that Cornwall could be a “beacon” for the UK by becoming self-sufficient on a mix of low-carbon and energy storage. The Committee also heard that there would be opportunities for small and micro businesses, as the UK would need to address its unintended bias towards big business. The nature of investment could also be looked at, as Members were told, at present investment focussed on capital expenditure, while the area would benefit from revenue.

3 April 2017