Concerns have been raised over the lack of scrutiny of the Cardiff Capital Region city deal, worth £1.2bn.
The CCR city deal was set up to invest £1.2 billion on the local economy in south-east Wales. Some £734m will go on the South Wales Metro major transport scheme, with railways electrified and five new train stations built. The remaining £495m is called the ‘wider investment fund’, spent on promoting economic growth.
Some details of where public money will be invested — £4m on healthcare AI (artificial intelligence) software or £120,000 on writing a business case for building a science park — are revealed in agenda papers published to the CCR website, but without naming companies or developers receiving the money.
The city deal covers 10 council areas across south-east Wales: Blaenau Gwent; Bridgend; Caerphilly; Cardiff; Merthyr Tydfil; Monmouthshire; Newport; Rhondda Cynon Taf; Torfaen; and the Vale of Glamorgan.
The cabinet, made up of the 10 council leaders and the CCR director, usually meets in public to discuss where to invest. Before lockdown, meetings were held in council offices, and press and members of the public could attend to hear how those decisions were arrived at — what public money was spent on and why.
Cabinet now meets online via videoconferencing. But so far, the public has been unable to watch.
In charge of the CCR are Kellie Beirne, director, and Anthony Hunt, chair of the cabinet. Ms Beirne previously worked for Monmouthshire County Council as deputy chief executive for eight years; while Councillor Hunt is the leader of Torfaen County Borough Council.
In an interview, Cllr Hunt said the team will look into webcasting remote cabinet meetings for the public to watch. He said: “Hopefully we can go back to physical meetings later in the year, when the cabinet meetings will be webcasted. We will make access easier for the public. That’s not something we need to make difficult.”
While the city deal was first signed in 2017, the CCR is now entering an “exciting period”, Cllr Hunt said, where it has got off the ground and can begin investing in the local economy in south-east Wales.
He said: “We’ve been setting the foundations right, getting relationships right, and building the foundations of governance.
“We’re looking at an exciting period where we’ve done that and we can get on with the other schemes. People want to see us trying to make a difference to the regional economy, and we think we can make a real difference.”
One of the first investments was in a compound semiconductor factory just outside of Newport. Compound semiconductors are crucial to technology like wifi, smartphones, GPS and satellites.
IQE, a semiconductor company, received £33 million of funding from Welsh Government and the CCR in 2017, to build a new foundry in the former LG plant at Imperial Park. Cllr Hunt described it as an “investment that creates and safeguards jobs, and helps put the region at the heart of an emerging technology”.
But IQE issued profit warnings November last year, sparking concerns from councillors in Cardiff. Shares in the company have since rebounded and bosses expect to make a profit again soon. One CCR cabinet member, ex-leader of Caerphilly County Borough Council David Poole, had to step down recently after it was revealed he held shares in IQE.
Elsewhere, the CCR is also looking at fintech and medical technology. Recent investments include in an AI-health data company, a trade body for the financial technology sector, and building research labs for a life sciences park.
While the huge investment in the local economy is welcomed, opposition councillors at Cardiff council have raised concerns about the lack of scrutiny.
Each of the 10 councils send one councillor to sit on a scrutiny committee. However, all but one are members of the ruling party in their council, prompting questions of independence.
Cllr Adrian Robson, Cardiff Conservative group leader, said: “The scrutiny committee has only met a few times. When we see their reports come back, they haven’t quite got it yet — it’s not got off the ground. There’s a big debate about what they should be scrutinising.
“It’s a heck of an amount of money. When it’s reviewed, the UK government will want to see if their money is being spent in accordance with the ideals set out in the initial announcement. Scrutiny is something the government will look at.”
Cllr Rhys Taylor, Cardiff Liberal Democrat group leader, said: “Despite all the promises when CCR launched, there appears no meaningful local democratic oversight or scrutiny.
“With such vast amounts of public funding being committed, people need the assurance that their local representatives are given the chance to scrutinise and agree on the appropriate allocation of funding, or even the prototypes.
“The CCR cabinet is to all intents and purposes a closed shop. If the deal fails to deliver, the lack of scrutiny will be a key factor.”
But Cllr Hunt refuted the claims and said scrutiny was “very healthy”. He said: “There’s 10 different local authorities coming together, and each council has very different cultures. People can bring up issues. They can voice concerns if they’ve got them.
“Scrutiny could always be improved, and I’m keen to look at ways to improve it. Maybe it’s difficult to scrutinise at this stage of building a project, where we’re getting the governance and structure right. That’s quite difficult to get your hands on to scrutinise. When more decisions start to be made, there will be more meat to scrutinise.”
Another concern raised is on democratic accountability. In other city deals elsewhere in the UK, like Manchester, voters directly elect mayors to head the new organisations in charge of the money. In the CCR, the chair is voted in by the 10 cabinet members.
Jeff Jones, ex-leader of Bridgend County Borough Council, said: “Andy Burnham in Greater Manchester faces direct accountability through an election. Who is Anthony Hunt accountable to? Basically voters in the ward he represents in Torfaen and Labour group members in Torfaen.
“Most voters in south-east Wales wouldn’t even know he is. Even though he and the other nine are making decisions to spend hundreds of thousands of pounds of public money.”
However Cllr Hunt said “quiet teamwork” works better than directly elected mayors. He said: “I’m not a great fan of directly elected mayors. The danger of that is it becomes all about one person. We’re all accountable to our own electorates, and these things are a balance.
“The CCR is a partnership and it’s teamwork that’s going to make the difference, with all the leaders pitching in. We can be bigger as a whole than we are as individuals.
“I’ve never been attracted to the idea of directly elected mayors. There’s too much brash personality and egos in politics without creating more need for that sort of thing. Quiet teamwork is the way to go about this.”
Mark Hooper, founder of coworking company Indycube, said there was a “democratic deficit”. Mr Hooper, who is also a town councillor in Barry, questioned whether the money invested will reach all parts of the region. City deals are based on trickle down economics, Mr Hooper said, the idea where creating well paid jobs will benefit poorer communities elsewhere in the region.
Mr Hooper said: “I don’t think trickle down economics works. Wealth is sticky. If it’s stuck in the centre of Cardiff, it doesn’t trickle out to the already poor areas of our community. If the deal works, it will keep wealth where wealth already is.”
He added that the CCR focuses too much on economic growth, measured by GVA, rather than wellbeing and helping people in poverty. He said: “The only way we could get money out of the UK government was to accept those growth measures as being targets for the city deal. So you end up looking for high growth sectors that don’t benefit the wider population.”
But the CCR “will guard against” that risk, Cllr Hunt said, and also invest in the foundational economy like social care, health and education.
Cllr Hunt said: “That’s a criticism of city deals across the UK, rather than specifically ours. But it’s something we need to guard against very strongly. We have to make sure the supply chain is there in the region, which provides that wider spread of affluence.
“The temptation is to go for easier wins, but we could meet the target and miss the point. We need to spread growth throughout the region, and not just the parts of the region that are most affluent.
“The companies can be based across the region, and we need to make that a reality. Community resilience is an emerging theme, and Covid-19 has brought that to the fore.”