Agenda item

The report was noted.

The Director of the Swansea Bay City Deal provided an overview of the Quarterly monitoring report contained within the agenda pack[PC1] .

Business engagement and communications – Officers advised that the annual report was approved and published, and officers were hoping to draw out of that case studies to make it more real and share benefits realised, so far and progress updates. Officers are also trying to get out into commercial business-related communities by taking a showcase event to each of the 4 boroughs. They have already done one in Pembrokeshire which was well attended. All 9 projects and programmes attend the showcases.

Yr Egin – Members were told that the 5 year anniversary event is on the 26th of October to celebrate the success of the project.

Pentre Awel – Officers advised that Zone 1 is moving forward. There are work packages that have gone on to ‘Sell to Wales’. The apprenticeships aren’t captured yet but they have had work experience placements and school interactions as well as construction spend monitoring. Pentre Awel have been successful with a Shared Prosperity Fund Grant, and they are refreshing the website and posting promotional videos online. They launched in May 2023 a skills and talent 21^st Century skills project. Members were advised that Pentre Awel have planned activities, in  Zone 1 it is focusing on Innovation and the business network working with North Wales at options for outdoor activities. They are also looking at the integrated regional care fund capital bid and looking at networking, engaging, and collaborating and securing additional funds.

Officers explained that for zone 3 Assisted living accommodation the RIBA stage2 design is complete and officers are scoping and modelling for zone 2, which is the Nursing home, residential rehabilitation and extra care facility which are progressing well.

Homes As Power Stations HAPS – Members were informed that the supply chain lead has been recruited and in post. Supply chain engagement has already happened, and they are looking at the supply and demand and reviewing it across the region. The incentive fund call had a deadline of the 21^st of September with sift ongoing, that will be the allocation of City Deal funds in the first round. Officers advised that there had been a showcase event with Modular in September to show people what HAPS would look like. They also have the supply chain development fund and are allocating that in the coming weeks.

Yr Egin Phase 2- Officers explained that the University of Wales St David are pursuing a digital production facility; this will need to go through a change request because it isn’t in the original business plan as was approved before. Officers are waiting and supporting them in developing that.

Swansea City Digital Waterfront District- Members were informed that the hotel is still under negotiation to secure a developer. The Kingsway Construction is continuing as planned but has had a 2month delay although still on track. The topping out ceremony is next week so the outer form of the building is complete, and they are marketing the space and have heads of terms progressing with an anchor tenant and procurement for a building management company is underway.

Officers explained that the Innovation Matrix has a delivery confidence assessment of Amber/Green in the Gateway Review. From a tenancy perspective, officers said that they are doing brilliantly, with 75% of their occupancy at a stage of nearly signing heads of terms. Since this report officers said this is up to 90% interest now in heads of terms level. The innovation precinct lead by University of Wales Trinity Saint David are going through options with Swansea Council and are hoping to go through a change process in the coming months.

Pembroke Dock Marine - Hanger Annexes are complete, with Hanger 4 being handed over to the tenant and the other 3 hangers will be handed over to their tenants imminently. The slipway is now completed, and the Timber Pond infill has also been completed.

They are working with lots of collaborative bids with Ofgen strategic innovation fund looking at Wave and National Grid about grid connection points. Officers advised that with Floating Offshore Wind, they have shared the testing and demo study with Welsh Government and Crown Estate and are doing lots of collaborative and engagement work.

Officers advised that a new risk has been identified in Pembroke Dock Marine relating to the unsuccessful Contracts of Difference Auction, regarding Offshore Wind run by UK Government. This was the first test of the annual process, and it received no bids.

Pembroke Dock Marine

A lot of companies around the Swansea Bay City Region did not enter or withdrew from the Auction Round 5 before results were announced. Officers said that on reflection the state of the energy market meant significant price increases facing offshore wind to construct the wind turbines. This meant there is a lot of risks associated for developers and supply chains. There are active discussions around re-forming the contract for difference process and another round is coming out on spring 2024 called Auction Round 6 and they are hoping to re-invigorate offshore wind growth in conjunction with UK Government. The Celtic sea projects are expected to developed through the Crown estate commercial scale leasing rounds and they will do lots of things around the pre seabed lease phase but that will take some time to undertake and the partner feedback is that floating offshore wind wasn’t successful but it’s not an indicator of future outcomes of flow particularly in the Celtic sea and the work plan is in place to deliver the Pembroke Dock outcomes as planned and the innovation structure will be there to serve whatever energy transitions there are for decades to come. Officers have mitigations from each of the partners available should members want to read them.

Campuses – Officers are waiting on the secondary funding agreement between Swansea University and Swansea Bay University Health Board to be signed off. They have at risk, completed RIBA stage 2. RIBA stage 3 for Sketty Lane is being progressed noting the increased cost. Ecology surveys for Morriston access route has been done. Officers advised that work is being done already for Phase 2 of campuses on Ashely Road such as the hockey stand and modular changing and 3D pitch facilities.

Supporting Innovation and Low Carbon Growth. – Bay Technology Centre has 5 tenants occupying 37% of the space, further potential tenants are being processed. Morgan Sindal have been appointed as the contractor of SWITCH which is the decarbonisation of steel lead by Swansea University. Four applications have been progressed for stage 2 of the property development fund and there are two on the reserve list that are also being looked at for funding. Officers confirmed that the Hydrogen stimulus project is going well and they are putting in a 100KW Hydrogen Electrolyser. Members were advised that there is an advanced manufacturing production facility as part of the business case and Joint Committee has approved the option for them to enhance that part of the business case and then secure the additional £5.3 million in funding to develop a skill centre for manufacturing production. Subject to a change request, this will need to be approved by Welsh and UK Government.

Members commented that of the total job target of 9686, 21% of investment has been spent and 5.6% of the target jobs created and questioned the amount of sustainable jobs that is hoped to be achieved with this investment. The Director confirmed that the actual job creation figure is higher in reality, but this can’t be reported at the current time as further evaluation is needed.

Officers used the example of Yr Egin who are undertaking an economic appraisal, and this will also look at the number of jobs created so those jobs can be added to the figures. Officers explained that each project of City deal will have an evaluation after it has been built ad in in operation which will give an indication on jobs, wider investment and economic impact. There is also an evaluation sub-group with all the project leads that will identify how what they will be evaluating. It was noted that the target date for the creation of jobs is 2033.

In relation to the University Project, members asked for confirmation that additional costs were being met by the university and asked if value engineering had been carried out? The Director confirmed that the university were meeting the additional costs and were in the process of undertaking value engineering. Members commented that construction costs are starting to decrease and asked what impact this will have on ongoing assessments over the next 6-12 months.  The director confirmed that a construction cost impact assessment is carried out monthly, the current report is now outdated; costs have increased from £31 mil to £36 mil. It was noted that costs increase quicker than they come backdown and although costs have stabilised, any cost decrease is not apparent yet in contracts awarded. The Director commented that previous months had been unstable, with most projects costing more than the original business cases and final costs cannot be identified until project design and build and contracts are awarded. The inflation being experienced is far beyond the standard inflation that was originally factored in when the business cases were written 2-3 years ago.

Members commented that it is halfway through the procurement process and asked if slippage is anticipated and if contractors want to delay things hoping costs will come back down. Officers advised that contractors are still bidding despite the inflated costs. The Director confirmed that delays and negotiations can cause slippage, but it is hoped that this won’t affect the region attracting investors. No projects or programs have said they can’t proceed and are either taking the hit of rising costs or renegotiating.

Members commented that the current price structure will remain for some time to come but will eventually stabilise but doubt it will ever come down again to the old levels. Officers agreed that prices don’t fall as fast as they increase, and it will potentially stabilise, but the volatility will still throw spanners in the works and will affect revenue. If City Deal ever got to a situation where they couldn’t deliver what they thought, they could then they can go back to the Government and explain this but that isn’t likely to happen as it stands.

Members requested site visits to Pembroke Dock Marine and other projects. It was suggested that Pembroke Dock Marine would be appropriate to visit as this site could have an influence on the whole of West Wales. Officers agreed that can support this.

The report was noted.