Private sector funding boost for £1.28 billion city deal projects

Richard Youle, local democracy reporter

A surge of private sector funding is expected to flow into south-west Wales as various city deal projects come to fruition, a meeting heard.

The £1.28 billion Swansea Bay City Deal comprises nine energy, advanced manufacturing, digital, and health and well-being projects in Swansea, Neath Port Talbot, Carmarthenshire and Pembrokeshire – all aiming to boost the economy and create around 9,700 jobs over 15 years.

Key to the city deal’s success is £637 million of private sector funding, with the remainder of the £1.28 billion coming from central Government, the four participating local authorities, plus health boards and universities.

Regional leaders

A report before a committee of regional leaders which oversees the city deal said £66 million of private sector funding had been secured in the first six years, up to the end of March 2024. It said a further £78 million was expected by the end of the current financial year.

Peter Austin, city deal business engagement manager, told the committee: “This is quite a positive position for us to be in at this time. We would expect over the next five years to see this increasing dramatically as all the infrastructure that we build opens and starts delivering its business case.”

He added that the current forecast showed £669 million of private sector funding heading the region’s way over the course of the city deal – £32 million more than originally envisaged – although it is an estimate.

And achieving such a level of funding is currently classed as an “amber risk” by city deal personnel due to uncertainty.

“There is still a long way to go,” said Mr Austin. “At the moment, (we are) relatively happy with the way the projects and programmes are performing. They all remain confident that they will achieve or over-achieve what they expected to do at the outset.”

Nine projects

A table in the committee report listed all nine projects, how much private sector funding they were aiming to secure and how much had flowed up to March 31, 2024.

It said a project to create at marine energy hub at Pembroke Dock had £17.7 million of its £20.1 million private sector contribution, and that a programme to boost digital infrastructure across the region had £45.1 million of its £56.1 million target estimate.

A health, well-being and research development called Pentre Awel being built on the outskirts of Llanelli hasn’t secured any of its estimated £110.1 million of private sector funding yet, but it’s still early days and the taps are expected to flow from 2027-28 as things like a hotel and assisted living units are added.

A Swansea project consisting of a large office building on The Kingsway, research and business space at the University of Wales Trinity Saint David’s SA1 campus, and the new Swansea Arena, aims to attract £33.4 million of private sector funding, largely via a new hotel beside the arena. The private sector contribution up until the end of March 2024 was listed at £20,000 but later in the report a figure of £1 million was given. This sum represented arena fit-out costs paid for by the venue’s operator, Ambassador Theatre Group.

The new Kingsway office has two tenants – travel company TUI and workspace provider IWG – and Swansea Council leader Rob Stewart said he was confident that the building would be fully let when it formally opened in the spring.

The biggest chunk of private sector funding for the city deal is for a major housing energy efficiency project called homes as power stations. It would result in 10,300 new and “retrofitted” properties in the four counties which generated electricity and used a lot less energy than conventional homes. A £375.9 million private sector contribution is the current estimate and while only £1.4 million had been secured up to the end of March last year, the project – like several of the others – has only recently started to pick up steam.

The £375.9 million would include the cost of building these new homes by private developers and registered social landlords like housing associations.
Asked by the Local Democracy Reporting Service who decided if new private and social landlord properties were classed as homes as power stations, Jonathan Burnes, director of the city deal portfolio management office, said a project team assessed them against a set of criteria. Dr Burnes said 867 homes as power stations have been completed to date, consisting of new builds and retrofits, and that a further 387 were in the pipeline.

The city deal projects have been affected by delays due to the Covid pandemic, among other things, and by inflationary costs. One of them, a £136 million Swansea University-led investment in new research and commercial campuses at Swansea Bay Sports Park, off Sketty Lane, and Morriston Hospital, Morriston, has a “red risk” status. The committee report said a funding agreement was still not in place.