‘Slippage’ On £1.24 Billion Investment Programme Due To Inflation

Inflationary pressures are bearing down on the £1.24 billion city deal for the Swansea Bay City Region, threatening delays and extra costs, leaders have been told.

The “slippage”, as it is known, is not a new phenomenon and is affecting construction projects across Wales and the UK.

City deal director Jonathan Burnes has recommended a re-profiling of all nine projects which make up the vast programme of city deal investment in Swansea, Carmarthenshire, Neath Port Talbot and Pembrokeshire.

He was asked at a meeting of the city’s ruling joint committee if the projects were on track to be delivered as originally planned or if they had been adjusted to match the available funding.

Dr Burnes said the projects were reviewed last autumn, and that they had “slipped further” since then. “I think what we have got to do in quarter one this year is re-profile them and try to get a more accurate forecast from now until 2027,” he said.

He added that discussions had been held with those responsible for the nine projects to ascertain the latest in terms of costs and time.

“Everything that we have in the portfolio is committed, and everybody is delivering towards their targets, but we do know there is a funding gap around a lot of the projects,” said Dr Burnes.

Work recently began in Llanelli on the first phase of one of the projects – a £206 million life science and wellbeing village. Like all projects, it’s being funded by local public sector organisations, including Carmarthenshire Council, central Government and the private sector.

The meeting was told that Carmarthenshire Council had had to address a £9 million funding gap for phase one, which features a new leisure centre, as it was vital to get the buildings up in time. The expected completion for phase one is October, 2024.

The council’s finance director, Chris Moore, said the £9 million funding gap for phase one was significant, and that the authority had had to “re-prioritise some of the delivery priorities”.

Council leader Darren Price said a huge amount of work had been done in the background on Pentre Awel and that the authority was committed to its delivery. “There is no way we could row back on that commitment,” he said.

Cllr Price suggested that the rising cost issue was raised formally with the Welsh and UK Governments. Neath Port Talbot Council leader, Steve Hunt, said he agreed.

Joint committee chairman and leader of Swansea Council, Rob Stewart, said the challenges were the reality of high inflation and were no different to other projects in Wales.

Cllr Stewart said it was heartening that all nine projects were live, as opposed to being on the drawing board, and that the latest £23 million allocation of central Government funding had been received. He also congratulated Neath Port Talbot and Pembrokeshire on their successful Celtic Freeport bid, which isn’t a city deal project but is expected to generate investment and jobs.

The city deal projects, apart from Pentre Awel, are a £171 million Swansea city and waterfront digital district scheme, a £505 million homes as power stations project, a £135 million health and science campus project in Swansea, a £60 million Pembrock Dock marine programme, a £59 million innovation and low carbon growth scheme, a £55 million skills and talent project, and a £25 million creative industry project called Yr Egin. They are expected to generate more than 9,600 jobs and significantly benefit the region’s economy. Private sector investment is key.

The joint committee was told that workers were now on site in Swansea to start the “innovation matrix” – one of the elements of the Swansea city and waterfront digital district project. This new building at the University of Wales Trinity Saint David’s campus in SA1 will support and grow start-up companies.

City deal portfolio development manager Ian Williams said the benefits of the city deal were starting to be realised and would accelerate as time went on. A report before the committee said 524 jobs had been created and £190 million invested in the city deal to date.