South West Wales Regional Economic Delivery Plan

Covering Carmarthenshire, Neath Port Talbot, Pembrokeshire and Swansea, the regional economic delivery plan aims to build on a major study that's identified regional strengths and opportunities.

Executive Summary

Background

1. South West Wales has a diverse economy and a unique set of natural and cultural assets, underpinned by the quality of its coastal and rural environment, industrial heritage and capacity and university presence. In 2014, partners in South West Wales jointly published an Economic Regeneration Strategy, setting the strategic groundwork for the Swansea Bay City Deal, a £1.3 billion investment package supported by the UK and Welsh Governments.

2. Seven years on, much has been achieved. However, there is more to be done to unlock the region's potential and to ensure that growth is resilient, sustainable and inclusive. In December 2020, the South West Wales local authorities, working closely with the Welsh Government, commissioned a new Regional Economic Delivery Plan. Looking ahead to the next ten years, this sets out an ambitious 'route map' for the development of the region's economy, identifying priorities for intervention and articulating how business, government, education, voluntary, community and social enterprise organisations and other partners should work together to bring them forward.

The economic and policy context

3. In the years leading up to the Covid-19 pandemic, the South West Wales economy performed strongly in generating new jobs: By 2019, there were some 322,000 jobs in the region, an impressive increase of 20,000 on the 2013 figure. However, there is still a large and persistent productivity gap with the rest of the UK.

4. Analysis of the region's economy highlights that:

The region's economic weaknesses are largely structural, linked with long-term processes of industrial change (which in some respects are still ongoing), and are shared with other regions in Wales and the UK.
However, the region has a series of distinctive strengths and opportunities. These are especially linked with the region's energy potential, university-industrial links, strong cultural identity, environmental assets and quality of life offer..
There is a 'window of opportunity' to build on and capture some of these, especially in relation to the green energy and net zero opportunity, where the region has specific advantages, but where other parts of the UK (and beyond) also have ambitious plans and technology and the dynamics of investment are changing rapidly. Having the capacity to exploit these opportunities will be important and the timing of this matters greatly.
The region contains much diversity, especially within the rural/ urban dimension. Despite diversity across the region, there is substantial commonality, and some of the big opportunities have a region-wide footprint. However, some of them extend beyond the region itself, and 'out-of-region' links (for example, the South Wales Industrial Cluster and the links through to Cardiff Capital Region) will be of relevance.
'Transformational' growth opportunities need to be balanced with the conditions for incremental improvements in resilience, capacity and capability across the economy. This was a key theme emerging from consultation as part of this Plan. There are distinctive opportunities at the 'leading edge' - but long-term employment resilience and wage growth will depend on the sustainability, productivity and expansion of the wider stock of regional SMEs.

5. The Plan has also been developed against the backdrop of a rapidly evolving policy context, as the region recovers from the Covid-19 pandemic and adjusts to a new trading and funding landscape following Brexit. However, looking to the next ten years, the climate emergency, the pace of (and adaption to) technology change and the need to ensure that the benefits are captured locally and are widely distributed will be central to economic strategy.

Our Ambitions and Missions for the next ten years

6. Over the next ten years, we will build on our distinctive strengths and opportunities summarised above to develop a more prosperous and resilient South West Wales economy.

7. To help plan for the future, we have identified three Ambitions (statements about the nature of the South West Wales economy that we want to work towards), supporting three complementary Missions:

Our strategic framework

Ambitions:

1. Resilient and sustainable
2. Enterprising and ambitious
3. Balanced and inclusive

Missions:

Mission 1: Establishing South West Wales as a UK leader in renewable energy and the development of a net zero economy
Mission 2: Building a strong, resilient, and 'embedded' business base
Mission 3: Growing and sustaining the 'experience' offer

Source: SQW 2021

8. Our three 'Missions' will guide future activity over the next ten years and beyond. They are designed to give a clear direction of travel, while remaining sufficiently broad to accommodate a wide range of potential investments that will come forward over time. The three high-level Missions are as follows:

Establishing South West Wales as a UK leader in renewable energy and the development of a net zero economy: Taking forward the region's major energy related projects and driving the benefits through the region (via industrial decarbonisation, supply chain opportunities, university-linked innovation, etc.).
Building a strong, resilient and embedded business base: Understanding and growing the business stock, supporting widespread social and commercial entrepreneurship, creating stronger supply chain and innovation networks, making public sector support sustainable; driving forward technology adoption and diffusion.
Growing and sustaining the 'experience' offer: Linking environmental quality, quality of life and community character to create a region that retains and attracts talent and investment, and to promote this consistently and powerfully to the outside world.

Delivering the Plan

9. To translate our Missions into practical interventions, we have prepared a project pipeline. This sets out a schedule of interventions, describing how they contribute to our Ambitions and Missions, their current development status and the actions that need to be taken to bring them forward. This will be kept 'live': it will regularly be reviewed by regional partners and will evolve to embrace new investment proposals as they emerge.

10. Currently, the projects within the pipeline have a combined value of around £3 billion. While some are at an early stage of development, and costs will be determined through the business case process, this gives an indication of the scale of the opportunity ahead. Building on the success of the current Swansea Bay City Deal, we will pursue the creation of a further, flexible Investment Fund to co-invest alongside the private sector in projects that will deliver our Missions, where business cases are robust.

1. Introduction

Welcome to the Regional Economic Delivery Plan for South West Wales. Looking ahead to 2030, this Plan sets out our ambitions for a resilient, broad-based and sustainable economy - and outlines where we will focus our efforts in the next few years to realise them.

Introducing South West Wales

1.1 Extending from Neath Port Talbot in the east to Pembrokeshire in the west, via Swansea and Carmarthenshire, South West Wales has a diverse economy and a unique set of natural and cultural assets.

1.2 Economically, our industrial heritage combines with some of the UK's most significant marine energy potential, driving major opportunities for decarbonisation and the growth of the UK's Green Economy. Environmentally, the coastline and countryside - including the Pembrokeshire Coast and Brecon Beacons National Parks and the Gower Area of Outstanding Natural Beauty - contribute to a superb visitor offer and quality of life. Culturally, the region encompasses the dynamic, growing university city of Swansea, a diverse and distinctive network of rural towns and an increasingly vibrant Welsh language.

A bold and inclusive new economic delivery plan

1.3 In 2014, partners in South West Wales jointly published an Economic Regeneration Strategy, setting the strategic groundwork for the Swansea Bay City Deal, a £1.3 billion investment package supported by the UK and Welsh Governments.

1.4 Seven years on, much has been achieved. The region's knowledge and research capacity has been supported through the delivery of major facilities such as the Swansea Bay Campus and continued investment in industry-academic links. The economic opportunities associated with the growth of the health economy have been reinforced through the development of the new Institute of Life Sciences and the start of work on the Pentre Awel health and wellbeing campus in Llanelli. S4C's new headquarters has opened in Carmarthen, accompanied by a concentration of creative media businesses; substantial investment has continued to flow into Pembrokeshire's offshore renewable opportunities; and Swansea city centre's ambitious regeneration programme is well underway. There has been major investment in our digital connectivity, with exciting plans for a more sustainable regional transport system through Swansea Bay and South West Wales Metro.

1.5 This provides a strong platform for future growth. However, as the analysis in Chapter 2 makes clear, there is more to be done to unlock the region's potential and to ensure that growth is resilient, sustainable and inclusive. Looking to the next ten years and beyond, the South West Wales local authorities, working closely with the Welsh Government, have prepared this Regional Economic Delivery Plan to ensure that we make the most of the exciting growth opportunities that are ahead of us.

Combining strategic clarity with delivery flexibility

1.6 In developing the Plan, we have followed a sequential approach. First, we started with a fresh view of the evidence, considering the 'state of the region' and the outlook for the future. This informed our high-level objectives, setting out "what we want our economy to be (more) like". These provided a framework for a series of clearly-defined missions: key areas of focus for the next ten years, and the interventions, or project activities, needed to achieve them.

Regional Economic Delivery Plan logic sequence

Issues: what is the context in which the Plan is being developed?
Objectives: what do we want our economy to be like?
Missions: what should our key areas of focus be?
Interventions: what actions do we need to take?

However, we live an uncertain and dynamic world, and over the lifetime of this Plan, we will need to respond to new challenges and opportunities (and new ideas and investments that are yet unforeseen). A resilient plan is a flexible and agile plan: while this document provides strategic clarity and focus on our priorities, we anticipate that project actions and investments will evolve over time.

Navigating the changing strategic context

1.8 This Plan is developed in the context of (and contributes to) a range of plans and strategies developed at local, national and UK level. Looking across the strategic landscape, a number of themes are especially relevant to this Plan:

• First, the Well-being of Future Generations Act 2015 requires public bodies in Wales to consider the long-term impact of their decisions across all aspects of wellbeing. The Act outlines seven 'wellbeing goals' - and public policy should contribute to all of them, not just one or two. For an economic plan, that means that in delivering "a prosperous region", we should also contribute to a region that is more resilient, equal, healthy, cohesive and globally responsible, and which enjoys a vibrant culture and Welsh language. The principles of the Act are explicitly embedded in the Welsh Government's Economic Resilience and Reconstruction Mission (and its principles of "Prosperous, Green and Equal") and are central to this Delivery Plan.

• Second, there is an overarching and firm commitment to decarbonisation and the achievement of 'net zero' by 2050. The UK and Welsh Government is legally committed to net zero carbon emissions (over a 1990 baseline) by 2050, a process that will involve far-reaching changes in industrial processes, transport networks and heating systems. The Welsh Government's Programme for Government commits to "acting decisively to tackle the nature and climate emergency", and this is reinforced in the establishment of the Minister of Climate Change portfolio and (for example) in the clear prioritisation of sustainable and active travel within Llwybr Newydd, the new transport strategy. From an economic strategy perspective, the decarbonisation imperative creates opportunities for innovation and technology development, as well as an urgent need for adaptation to support industrial resilience.

• Third, a broader policy focus on the opportunities and challenges presented by technological and demographic change featured in the UK Government's former Industrial Strategy and remains prominent in its successor, the Plan for Growth. A series of reports to the Welsh Government have also set out approaches to digitalisation and the adoption of an innovation strategy focused around meeting societal need.

• Fourth, the response to the UK's exit from the European Union. Over the coming years, we will need to adapt to changing patterns of trade. The impact of this is not yet fully apparent, although for some sectors will be far-reaching (for example, the adaption of agriculture to the new Environmental Land Management system). Brexit also means a significant change for South West Wales in terms of the public investment available for economic development: historically, the region has been one of the UK's largest beneficiaries from EU funding. Looking to the future, it is likely that we will need a new, perhaps more 'investment and return' based approach.

• Finally, this Plan is developed in the context of a wider approach to regional economic development in Wales, with South West Wales forming one of the regional 'building blocks' of Future Wales, the new national spatial development plan. Plans have also been advanced for new approaches to regional governance and delivery (described in Chapter 5), as well as the Regional Economic Framework, which has been developed by the Welsh Government in conjunction with the local authorities alongside this Plan.

Plan structure

1.9 The remainder of this Plan is structured in six chapters:

Chapter 2 sets out the economic landscape within which the Plan has been developed, outlining the strengths, weaknesses, opportunities and threats facing the regional economy and the key issues that need to be addressed.
Chapter 3 introduces our strategic framework, setting out our ambitions for the future and the type of economy that we want to help develop.
Building on this, Chapters 4-6 explain our three key 'missions': the specific goals that we want to achieve over the next decade.
Finally, Chapter 7 sets out how we will deliver the Plan, including the role of the Corporate Joint Committee and options for future implementation arrangements.

1.10 In addition, Annex A provides a summary SWOT analysis. Annex B provides an assessment of this Plan against the Wellbeing of Future Generations Act (Wales) 2015. Annex C explains the process of developing the Plan, and how partners were engaged and priorities identified.

1.11 Two supplementary documents support the Plan:

First, an Evidence and Policy Landscape Review provides further detail in support of the narrative in Chapter 2

Second, while this Plan takes a long-term view, specific actions will evolve over time as business cases are progressed and new investment opportunities come forward. Alongside the Plan, we have prepared a supplementary Project Pipeline document, setting out known and emerging interventions and the next steps involved in taking them forward.

2. South West Wales: The economic landscape

South West Wales has performed strongly in recent years in generating new jobs and driving forward priority investments. Despite continuing productivity challenges, there are major opportunities ahead for sustainable growth, linked with our energy, innovation, business and community assets. This chapter sketches a picture of the region's economy, outlining recent economic performance, key strengths and assets, and the major 'transformational' trends that will impact on future growth.

Places and connections: The region's economic geography- a distinctive heritage and a diverse economy...

With a population of around 705,000 across four counties, South West Wales is a diverse region. Historically, much of the area was an industrial pioneer, driven initially by the coal and metals industries and later by petrochemicals and manufacturing. Over the past 40 years, economic change has meant a challenging period of readjustment, which is to some extent still underway. But our industrial heritage has bequeathed an important legacy, including some of our leading research and innovation capabilities, our large advanced manufacturing sector and the character and form of our towns and cities.

2.2 Reflecting the region's population distribution and historic industrial development, the largest concentrations of employment are in the east, around Swansea Bay, as Figure 2-1 illustrates. Swansea itself accounts for around 40% of jobs in South West Wales (and is its main commuter destination), and the area around Swansea Bay and Llanelli is defined in Future Wales as a 'National Growth Area' for new jobs and housing. The east of the region also contains a distinctive and extensive concentration of manufacturing activity at Port Talbot, including the UK's largest steel plant and the Port Talbot Waterway Enterprise Zone.

2.3 Further west, around 20% of national energy supplies enter Britain via Pembrokeshire, with the Haven Waterway a major centre for existing energy infrastructure and the exploitation of new opportunities. More broadly, Carmarthen and Haverfordwest have important roles as regional centres, supporting an extensive rural economy and food production industry. Reflecting the environmental quality highlighted in Chapter 1, the region enjoys extensive environmental designations, including the two National Parks and AONB and special protections along much of the coast. This environmental quality supports a large, important and growing visitor economy as well as delivering significant wellbeing benefits to our local residents.

**Major concentrations of employment**
Location	Number of jobs
Ammanford	3250
Belgian / Jersey Marine	15000
Carmarthenshire	14500
Haverfordwest	11300
Llanelli	21800
Milford Haven / Pembroke Dock	8000
Neath	9500
Port Talbot / Margam	19800
Swansea Central	39000
Swansea NW	8000

2.4 Across the region, around 208,000 people speak Welsh - about 31% of the total population, and an increase of around 23% in the decade to 2020. The Welsh Government's Cymraeg 2050 strategy sets out a positive strategy to develop "a thriving, sustainable economy in rural areas" and to promote the Welsh language through the media and the growth of the cultural sector - a goal recently reinforced by investment in S4C's headquarters presence in Carmarthen.

... with important links beyond the region

2.5 Connections beyond the region are important too. The ports at Fishguard and Pembroke Dock provide the main gateway between the south of the UK and Ireland. Looking east, there are strong links (and important commuter flows) between the manufacturing clusters at Port Talbot and neighbouring Bridgend; shared issues across the Western and Central Valleys and the South Wales industrial base; and relatively easy access to opportunities in Cardiff and beyond. While our Plan focuses on what is needed for the region and within the region, economic boundaries are fluid: the key point is that South West Wales is not self-contained and homogeneous; it is outward facing and diverse, and it makes sense to work together.

The medium-term economic outlook

2.6 This Plan has been developed following the substantial economic shock precipitated by the Covid-19 pandemic. The UK economy contracted by 9.9% in 2020 - an unprecedented fall in annual output in modern times - as public health restrictions effectively closed some sectors (notably hospitality, a key industry in South West Wales). Across the region, the claimant count was 74% higher in December 2020 than it had been at the start of the year, with the full employment impact mitigated by the furlough scheme and the extensive series of business grant, loan and rates relief measures brought in by the Welsh and UK Governments.

2.7 At the time of writing, the outlook for economic recovery from the pandemic is positive. In July 2021, independent forecasters anticipated UK GDP growth of 6.9% in 2021 and 5.5% in 2022, sufficient to restore the economy to its pre-pandemic size. In South West Wales, the percentage of employments furloughed fell from 12.5% in December 2020 to around 5% in June 2021, the claimant count had started to fall, and many employers were reporting staff shortages.

2.8 However, the pandemic has accelerated disruptive trends that are likely to have longer-term impacts. Structural changes in the retail sector have impacted on town and city centre uses. Remote working has expanded and is likely to become more permanent - presenting opportunities for people to access a wider range of jobs, but also potentially creating additional housing and service delivery pressures in rural and coastal areas. At the time of writing, the Covid crisis has not come to a conclusion and its consequences are still not yet fully known - but they are likely to have a longer-term influence over the period of this Plan.

The state of the region: Recent economic performance

2.9 Looking back over a longer period, the regional economy has grown since the previous Economic Regeneration Strategy was prepared. But on many indicators, there is still a significant gap between outcomes in South West Wales and the rest of the UK. The Economic and Strategic Landscape Review which accompanies this Plan explores our recent economic performance in more detail: the following paragraphs provide a snapshot of the 'state of the region'.

We have seen growth in jobs and economic activity, but there is capacity for more

2.10 The 2014 Strategy anticipated a relatively slow recovery in employment terms from the recession following the 2008/09 financial crisis. However, performance has been much stronger than anticipated. By 2019, there were some 322,000 jobs in the region, an increase of 20,000 on the 2013 figure. Despite some net job losses in 2016, growth until the start of the pandemic was stronger than in the rest of Wales.

2.11 However, there is still 'spare capacity' in the labour market. Although the 'jobs density' (the number of jobs per working age resident) has grown steadily, it is still lower than the UK and Wales averages. Notably, despite Swansea's importance as a regional centre and inbound commuter destination, the city's jobs density is low relative to Cardiff and Newport.

2.12 There have been steady improvements in the economic activity rate over the past 15 years - at a faster pace than in the rest of the UK. However, South West Wales' economic activity rate continues to fall behind the UK average (and slightly behind the Wales average). If the gap between the 2019 regional economic activity rate (73.8%) and the UK rate (78.9%) could be bridged, it would bring an additional 21,000 people back into the labour market.

Economic output has grown, within the context of structural change

2.13 Economic output (measured in gross value added) was around £13 billion in 2018 - equivalent to 21% of total Welsh output. The region's GVA increased by around £630 million in 2013-18 (representing growth of about 5% over the period). Within this overall expansion, some sectors grew strongly: combined, wholesale and retail; warehousing; real estate; information and communications; and health and care contributed an additional £689 million to GVA. But some sectors contracted over the period, with the metals, electrical products and machinery sector reducing its output by around £322 million.

2.14 This suggests a continuing process of adjustment within the economy, which is also reflected in employment growth (and a strengthening share of employment) in hospitality, health, distribution and administrative activities. Nevertheless, manufacturing is of fundamental importance to the regional economy, accounting for 13.6% of total output (and over 25% of output in Neath Port Talbot).

There is still a large productivity gap, which impacts on local prosperity

2.15 Productivity (the amount of GVA generated for every filled job) was around £45,100 in South West Wales in 2018. The gap with the rest of the UK has narrowed slightly over time. But it is still substantial: in 2018, productivity was around 80% of the UK level.

Productivity growth isn't 'everything'.... But it is necessary for long-term economic wellbeing, even if it isn't sufficient. More 'productive' activities ought to lead to higher average pay and more opportunities for people to build careers and businesses in the region. But productivity can be seen as a somewhat abstract measure: a highly 'productive' economy might not necessarily be a sustainable or equitable one, and not everything that society values generates high levels of monetised output. So, as well as generating higher output per worker, the key challenge is ensuring that the productivity gain is captured locally in pay, conditions and business opportunities.
Productivity growth is not just about growing 'more productive' sectors, or those firms at the leading edge. The structural shift in South West Wales from relatively high value-added manufacturing to lower value services has presented a long-term challenge.
Part of the gap is also explained by the type of activities that take place in different locations within the same industry - with headquarters activities, research and development and so on typically contributing to higher value output per worker. But recent research also highlights the gains that can be made in all sectors (including those within the 'foundational economy' as well as within 'export'-like industries) through investment in management capacity, technology adoption, supply chain capabilities, skills development and so on.
This is likely to be especially important in South West Wales: in a region with relatively few large firms, a broad-based approach that supports SME growth and entrepreneurship across the board and increases the local 'stickiness' of investment is likely to be important.
Productivity growth is likely to be gradual over time. It may be accelerated by major transformational investments - but 'narrowing the gap', and ensuring the gain is captured regionally in higher pay and local business growth, is a long-term endeavour, demanding sustained investment across the economy.

The evidence reveals mixed progress against wider drivers of productivity

2.17 Linked with the region's overall productivity performance, there has been mixed progress in relation to wider 'drivers of productivity':

In relation to skills...

2.17 Recent years have seen a strong emphasis on strengthening links between providers and employers, with the Regional Learning and Skills Partnership playing an increasingly important role in brokering relationships, identifying employer need and providing better labour market intelligence.

2.18 Over time, there has been a steady improvement in qualification levels: in 2019, 35% of the working age population was qualified to NVQ4+, compared with 22% in 2004, and the proportion with no qualifications halved over the same period (partly as new entrants to the labour market gradually replace those who leave). But in relative terms, there is still a gap with the rest of the UK and substantial variation across the region.

In relation to connectivity...

2.17 There has been transformational progress in the delivery of digital connectivity since the 2014 Regeneration Strategy. Commercial investment and public support through Superfast Cymru and successor programmes have increased access to superfast broadband to over 90% of premises. However, beyond superfast, there is still a still a significant rural/ urban digital divide, with ultrafast penetration in Pembrokeshire among the lowest in the UK. The Digital Infrastructure programme across South West Wales aims to address this - but applications for new technology continue to advance rapidly: staying ahead of the curve will be important as digital technology transforms working practices and business models.

2.18 The picture is perhaps less positive in relation to transport connectivity. There has been some disappointment in the scaling back of plans to electrify the South Wales Mainline to Swansea. However, proposals are being advanced to take forward the Swansea Bay and South Wales Metro as the core of a better-integrated regional transport system (highlighted further in Chapter 4); Transport for Wales plans to increase services between Swansea and Manchester from 2022; and work progresses in taking forward active travel measures across the region. While the future policy presumption is against new strategic road schemes, investment has started on much-needed improvements to the A40 in Pembrokeshire and beyond the region, major improvements on the A465 Heads of the Valleys road are improving connectivity with the English Midlands.

In relation to the business stock...

2.17 The size of the region's business base grew in the years leading up to the start of the pandemic. In 2020, there were around 23,800 active enterprises in South West Wales, a number that had steadily increased over the preceding five years - and survival rates keep pace with the rest of Wales and the UK. But the region's 'enterprise density' (the number of enterprises relative to the working age population) and the start-up rate remain lower than in the rest of the UK. Recent research has highlighted that while overall entrepreneurial activity in Wales is broadly in line with the rest of the UK, there is a shortfall in perceptions of the availability of good start-up opportunities.

In relation to sites and premises for business growth...

2.17 South West Wales benefits from some substantial sites for industrial expansion, including the large strategic site at Baglan Energy Park, future phases of the Cross Hands development in Carmarthenshire, and key sites at Felindre and Fabian Way in Swansea and the Haven Waterway. However, there is a widely-recognised gap between demand and supply for industrial sites and premises, as low rents (and in some cases high remediation and infrastructure costs on ex-industrial land) make viability challenging, especially west of Swansea. The evidence is that this acts as a brake on business expansion, both to new investors and to existing local businesses seeking 'grow-on' space.

Inequalities remain significant

2.17 Despite jobs growth over time and improvements in economic activity, recent research highlights the extent to which rising living costs (especially housing costs) have impacted on the real incomes of the lowest paid, a situation which has accelerated during the pandemic.

2.18 Across the region, concentrations of disadvantage are significant, principally in the main urban centres of Swansea, Llanelli, Neath, Port Talbot and Pembroke Dock, and in the upper Western Valleys. Many of these concentrations are persistent over time and reflect the longterm impact of industrial change: while they highlight the importance of 'supply-side' measures to reduce economic inactivity and bring people back into the labour market, most households on low incomes are already in work. For a regional economic strategy, driving demand and creating "better jobs, closer to home" is a key goal and challenge.

Building on strengths: Key assets

2.26 Overall, the review of economic performance over recent years suggests good progress, especially in terms of job creation. But there is a persistent gap in outcomes between the region and the rest of the UK. This is partly because most change is incremental: the investment secured through City Deal (for example) will not yet have translated into improvements in the economic data. It also reflects the 'structural' nature of many of the region's challenges, some of which (including the productivity deficit) are shared with other parts of Wales and the North of England.

2.27 However, South West Wales contains some distinctive economic strengths and opportunities which provide a good platform for future growth. Realising each of these presents a challenge for future strategy, which we have set out below.

We have nationally and internationally significant university research assets

2.28 There is a strong higher education presence in the region, anchored by Swansea University and University of Wales Trinity St David's campuses in Carmarthen and Swansea. Both universities have expanded in recent years, have made an important contribution to the region's physical regeneration (for example, through the Swansea Bay campus and the SA1 development in Swansea city centre) and are key economic 'drivers' in their own right.

2.29 Beyond this, Swansea University's research is ranked as 'world leading' in several (mostly STEM-related) subjects. Across both universities, key research capabilities relate to:

Advanced data science, where Swansea's assets include the Computational Foundry (bringing together computer science and mathematical expertise, and working with industry) and the CHERISH-DE Digital Economy Centre.
Health and medicine, with a strong focus on the application of data science in health, linked with wider computer science expertise, and including one of six Health Data Research UK (HDR-UK) sites nationally.
Engineering and manufacturing, especially in materials research, and with relevance to the energy and decarbonisation opportunities discussed further below.

2.30 There is a long history of collaboration between both universities and local industry, especially in the manufacturing sector. Examples of recent programmes include ASTUTE 2020, supporting industrial research, development and innovation in manufacturing businesses; and UWTSD's Manufacturing for Advanced Design Engineering (MADE) programme, designed to support collaboration with SMEs. Many industrial collaboration initiatives have been supported with European funding: as this draws to a close, it will be important to maintain the momentum and capacity that has been built up in recent years, while expanding opportunities for collaboration across the wider regional SME base.

2.31 The commercial research base is somewhat smaller. But there has been investment in recent years (for example, TWI's Technology Centre Wales and Advanced Engineering Materials Research Institute at Baglan), adding value to the university-based presence.

Our energy infrastructure is extensive, and we have some of the UK's greatest low carbon energy generation potential

2.30 South West Wales has long had an important energy sector, especially associated with Pembrokeshire's oil and gas industry. The infrastructure and skills associated with this will be important in taking advantage of the region's vast potential in renewable energy. Several opportunities are currently being developed through the emerging South West Wales Regional Energy Strategy. These include:

Wave and marine energy off the Pembrokeshire coast, with a series of commercial and pre-commercial projects underway and in the pipeline
The proposed Dragon Energy Island scheme in Swansea Bay, offering scope for tidal, wave and potentially solar energy generation
Onshore capacity, including the UK's largest onshore wind farm at Pen-y-Cymoedd and a range of opportunities in wind, biomass and waste-to-energy.

2.33 There is also substantial research and development capacity to support the region's renewable energy potential. The Offshore Renewable Energy (ORE) Catapult has a presence at Pembroke Dock and, with several other universities, is engaged in progressing new opportunities off the Pembrokeshire Coast. Swansea University's SPECIFIC Innovation and Knowledge Centre has expertise in the capture and storage of solar energy, while the University of South Wales' Hydrogen Centre at Baglan is supporting the experimental production of hydrogen energy storage systems.

2.34 Our energy potential is therefore a key asset to exploit - both for South West Wales and indeed the rest of Wales and the UK. The challenge over the next few years will be in realising the opportunity, recognising that some technologies remain relatively nascent - and in ensuring that the benefits can be captured locally. A long-term perspective will also be important in developing business cases for some of the region's major energy projects - recognising that while they have the potential to be transformational, the full benefits may take several years to be realised

Our business community offers scope for growth

2.35 We noted earlier the region's relatively low levels of enterprise density and its relatively low start-up rate. But business is central to future economic strategy - put simply, employment is either created by existing businesses expanding, new businesses starting up, or businesses from elsewhere deciding to locate in the region.

2.36 Recent years have seen the loss of some larger, externally-based firms (note, for example, recent job losses in some of the region's automotive supply chain). We retain relative strengths in manufacturing, food production and hospitality, with evidence of start-up and inward investment activity linked with the data science strengths highlighted above. However, the region's business stock is broadly-based: 'high growth' SMEs are quite widely distributed across sectors (and across the region); ownership models are diverse; and there are opportunities for productivity growth across the sectoral landscape. Following our analysis of the 'productivity deficit' above, the challenge is to strengthen the 'breadth and depth' of the business base, recognising scope for growth across the economy, including (but not just) in those activities at the 'leading edge' of technology and innovation.

Environmental quality and 'sense of place' are key assets

2.37 South West Wales' combination of 'place-based' assets is distinctive and rich, including the National Parks, the coastline, the sport and leisure offer and a university city offering both 'compactness' and a wide range of metropolitan amenities.

2.38 Beyond this range of functions and amenities, the region's distinctive identity forms an important part of the offer. There are two aspects to this:

First, 'quality of life' offer clearly forms part of the proposition to visitors, investors and potential new residents, and one which plays a key economic role. There is an important balance to be struck between environmental quality and community and environmental sustainability.

Second, the region's identity relates to the importance of 'community', the associations that businesses and other institutions have with the places in which they are based, and the stake that they have locally. This is harder to pin down in conventional economic terms, but relates to the extent to which value and ownership can be captured or embedded locally and the challenges in growing the business and employment base highlighted above.

Looking to the future: Key transformational trends

2.39 Future strategy will also be influenced by wider 'transformational' factors that will impact all aspects of economic life. While these apply to all advanced economies, the way in which they are addressed and how they interact with our existing economic structure and strengths will be fundamental. Three 'macro trends' are especially important, relating to decarbonisation, digitalisation and demographic change. We consider each in turn below.

Decarbonising South West Wales

2.40 As we highlighted in the earlier overview of the policy context, the UK and Welsh Governments' commitment to net zero by 2050 will have an impact on all aspects of policy.

2.41 In headline terms, Wales has been successful in reducing carbon emissions while maintaining economic growth: between 1990 and 2018, total CO2 emissions fell by 20%, and the country was on track to meet its 2020 carbon reduction targets. However, around 85% of the cut in emissions came from the power sector. While most other sectors also achieved reductions (especially manufacturing), these were substantially smaller, and the surface transport sector actually generated a net increase. Looking to the future and the net zero commitment, the Climate Change committee recommended a "leadership driven pathway" requiring far reaching action over the next thirty years.

"The actions required to achieve the targets - including full decarbonisation of the power sector, full switchover to electric vehicle sales, installation of low-carbon heating, and decarbonisation of manufacturing - go beyond those required from the world on average, in line with Wales' responsibility as a richer nation with larger historical emissions." - Climate Change Committee.

2.42 This presents South West Wales with some distinct challenges. Currently, regional carbon emissions are much higher than the Wales and UK average. These mostly reflect the role of the huge Tata works at Port Talbot, an industrial installation of national significance that remains reliant on coal inputs. The challenge for future strategy is enabling the transition of the region's industrial base, while ensuring wider action to decarbonise the transport, housing and manufacturing systems - and making sure that South West Wales remains competitive with other regions. Our renewable energy potential will play an important role in this, which we explain further in Chapter 4.

Digital transformation

2.43 'Digitalisation' refers to the transformation of the economy through massively increased use of data and the development of digital technologies such as artificial intelligence, machine learning and robotics. Digitalisation isn't about change within a single industry; rather, it is about the use of 'general purpose' technologies with a wide range of applications across industries.

2.44 Digital transformation is not new: the period since the publication of the last Swansea Bay Economic Regeneration Strategy has seen a transformation in the everyday use of new digital technologies, and it has been recognised as a key driver of economic strategy for some time. Three aspects of the transformational impacts of digitalisation are especially relevant:

Disruptive effects on industry: Use of digital technology leads to greater efficiency, with firms that have the capacity and capability to invest and adopt more likely to benefit from productivity gains and improved competitiveness. But its 'transformative' power is in the convergence of technologies to drive entirely new industries (wearable devices or gaming, for example), which in turn drive applications elsewhere. A consequence is the breakdown of traditional industry sectors and markets, leading to a recognition of digitalisation as the 'fourth industrial revolution'.
Impacts on the labour market: Estimates of the potential impact of automation on jobs vary greatly, although most studies suggest that while new technologies will substitute for labour in some sectors, this is likely to be more than offset by job creation. However, technology is changing the way in which work is done, with the potential for positive and negative impacts on working conditions; the need and opportunity for job changes over the course of the working life; changing demand for skills; and the ability to work remotely.
Impacts on services, potentially helping to overcome relative remoteness, and including the development of new ways of accessing health and care, which in turn impact on the development of new goods and services and demand for jobs.

2.45 Across all of these, the message for future strategy is that responding to digitalisation is not just about ensuring the 'supply' of new technology and connectivity (although that is important). It is also about driving economic demand for new skills and technologies - both at the 'leading edge' of innovation and throughout the economy.

Responding to demographic change

2.46 South West Wales has a growing population. However, the 'working age' population has fallen slightly over the past decade. Over the next 20 years, the 'working age' population is expected
to fall by around 1%, representing a net loss of around 4,700 people aged 16-64 over the period.

2.47 The gradual ageing of the population is a long-term trend. Key implications for future economic strategy include:

Changing working lives: The concept of 'working age' is becoming increasingly fluid, as people work for longer, and more flexibly (although individuals' ability to work for longer will depend on job type and conditions and the ability to adapt to new roles and technologies over time).
Changes in service demand: As the analysis of recent economic performance demonstrates, there has been strong growth in employment and output associated with health and social care, as demand increases from an ageing population. Changing demographics will support changes in wider demand for goods and services as well.
Rising dependency ratios: While changing demographics are driven by life expectancies and birth rates, they also partly reflect the balance of migration, with gradually falling populations in some post-industrial and rural communities, and in-migration, especially from older people, along parts of the coast39. This is a gradual process - but retaining and attracting younger people also helps to support community resilience and sustainability, and itself depends on generating local economic activity and demand.

Bringing it together: key issues for the Delivery Plan

2.48 Summarising the 'state of the region', our key assets and the long-term 'macro' trends that will impact across the economy, we can see that:

The region's weaknesses are largely 'structural'. They are linked with processes of long-term industrial change, are shared with many other parts of the UK, and map onto the region's relatively low productivity.
Set against this, there has been strong progress in recent years, especially in creating new jobs and in driving forward transformational projects. This provides a strong foundation on which to build.
South West Wales enjoys some distinctive strengths and opportunities - especially linked with the region's renewable energy potential, university - industrial links and its quality of life offer. These also have the potential to make a positive impact in relation to the long-term environmental, technological and demographic trends.
There is a 'window of opportunity' to build on and capture some of these strengths. Some are still at a relatively early stage (for example, elements of the renewable energy opportunity and the potential for industrial decarbonisation), but the technology is developing fast, and some other regions will offer fierce competition for investment.
We are a very diverse region, with a distinctive balance of urban, rural, national park, coastal and industrial assets. But there is substantial commonality across South West Wales, and some of our big opportunities have a region-wide footprint. Some also extend beyond the region itself, and outward-facing links will be important.
'Transformational' growth opportunities need to be balanced with the conditions for incremental improvements in business resilience and capacity across the regional economy. There are some distinctive opportunities at the 'leading edge' - but long-term employment resilience and wage growth will depend on the sustainability, productivity and expansion of the wider stock of regional SMEs - not just the 'pioneer' firms.

2.49 Based on this understanding of our economy and its potential, the next chapter introduces our strategic framework, to guide our actions over the next decade.

3. Our ambitions to 2030

Building on the evidence base, this chapter introduces our ambitions for the South West Wales economy. It explains the changes that we want to see over the next decade and introduces the three 'Missions' that will guide our shared activity.

From the evidence to a strategic framework...

3.1 Over the next ten years, we seek to build on the distinctive strengths and opportunities identified in the previous chapter to develop a more prosperous and resilient economy. To help plan for the future, we have identified three Ambitions (statements about the nature of the South West Wales economy that we want to work towards), supporting three Missions (priority areas on which our shared Delivery Plan actions will be focused):

Ambitions:

1. Resilient and sustainable
2. Enterprising and ambitious
3. Balanced and inclusive

Missions:

Action:

Pipeline of projects linked with each mission and developed through a business case process

Unpacking our Ambitions

3.2 Our three Ambitions are broadly cast. They recognise that achieving sustainable, long-term prosperity and the "South West Wales we want" is about more than the pursuit of economic growth as a goal for its own sake - and that prosperity will itself be enabled by progress across a number of fronts.

3.3 Our Ambitions seek an economy that is, over the long term, more resilient and sustainable; enterprising and ambitious; and balanced and inclusive.

Unpacking our Ambitions: The economy we want.

Resilient and sustainable

Resilient to technology change and the impacts of digitalisation:
- Supporting firms in adopting and adapting to new technology
- Building labour market resilience through the skills system from schools through to adult learning
Resilient to climate change and decarbonisation:
- Increasing the resilience of the region's manufacturing base (including in its (currently) relatively carbon-intensive foundation industries)
- Supporting adaption and adoption throughout the economy (across sectors and through the building stock and transport system)
- Delivering robust digital connectivity to support changing working practices and better access to employment.
Supporting resilient and more 'embedded' firms and supply chains
- Developing the local business base through access to support, finance, networks and procurement
- Embedding best practice and resilience throughout the supply chain
- Continuously building management capacity and capability.

Enterprising and ambitious

Ambitious in relation to our long-term energy opportunity
- Ensuring capacity to drive forward our potential
- Integrating our natural renewable energy advantages with our university and industrial strengths
Enterprising in relation to changing market conditions, technology and opportunities
- Investing in the skills system across the economy and driving demand for higher level and technical skills, as well as influencing supply
- Investing in the commercial property stock - for local businesses scaling up as well as new investors
Driving new investment, innovation and funding models
- Developing sustainable alternatives to European funding
- Promoting the region as a location to invest, work and visit

Balanced and inclusive

Balanced between innovation at the leading edge and sustainable growth across the economy
- Developing opportunities for 'new to the firm' innovation, as well as R&D and new technology and product development
- Recognising the opportunity for a diverse range of business and ownership models
Balanced spatially, across the region
- Celebrating regional diversity and a wide distribution of opportunity
Creating long-term growth, while sustaining and enhancing core environmental and community assets
- Recognising and enhancing the inherent value of the environment to the quality of life and quality of place proposition
- Supporting community ownership of economic assets, where this can support local opportunity and generate a sustainable return.

Realising our Ambitions

3.4 The Ambitions set out above are extensive, and are consistent with the Wellbeing of Future Generations Act. They are also all interlinked: they are not so much 'themes' as a vision of how we want the economy to evolve. Over the next ten years, all the actions that the South West Wales local authorities take in support of regeneration and economic development will contribute to achieving them - whether they are delivered at regional scale, or are more locally focused.

3.5 But to deliver our overall goal of a more "resilient and sustainable; enterprising and ambitious; and balanced and inclusive" economy, there are clear actions on which we will need to focus over the next decade. We have called these our three Missions, which we will use to guide delivery. These are:

Establishing South West Wales as a UK leader in renewable energy and the development of a net zero economy
Building a strong, resilient and 'embedded' business base
Growing and sustaining the experience offer.

3.6 The following chapters explain each Mission, setting out what we seek to achieve, the opportunities, challenges and risks that we need to address, and the solutions and projects that we aim to progress. Although we explain each Mission in turn, they should be seen as integrated: establishing South West Wales as a UK leader in renewable energy and a net zero economy is, for example, a key aspect of the other two Missions.

4. Mission 1: A UK leader in renewable energy and the net zero economy

Looking to 2030, we aim to make South West Wales a UK leader in renewable energy. That means taking advantage of our natural assets and our industrial and R&D capabilities to build an internationally-significant presence in future fuel technologies and to drive the decarbonisation of our industrial base and the wider economy.

Current assets:

Concentration of onshore and offshore opportunities at different stages of market readiness
Emerging Regional Energy Strategy and Welsh Government support
University R and D assets and growing corporate capacity for industrial decarbonisation

Next opportunities:

Linking energy generation with industrial decarbonisation
Making the most of opportunities presented by existing knowledge / research base
Translating early stage projects into investable propositions

Key challenges:

Counterveiling pressure of existing high carbon intensity industry
Securing / maintaining the capacity to drive the strategic agenda, and major projects forward
Competition from (and establishing collaborations with) other regions securing government support.

Key actions:

Additional capacity to drive forward the agenda
Progressing the region's major renewable energy generation projects
Attracting and driving forward new industrial development
Decarbonising transport and the housing stock

Understanding the case for the Mission: the core rationale

4.1 As set out in the evidence base the decarbonisation imperative is global, and in Wales is mandated by the UK and Welsh Governments' net zero commitments and the need to take urgent action now. There is a clear overall policy direction, which has been reinforced by the emerging suite of strategies at UK Government level ahead of COP26 in autumn 2021 and by the renewed and re-emphasised climate change focus of the Welsh Government. With a clear and compelling direction of travel, there is an opportunity for South West Wales to capitalise on its renewable energy assets and ensure that it is on the 'front foot' in adapting to change.

Delivering the region's low-carbon energy projects at scale

4.2 In South West Wales, our potential is clearly articulated, and is linked with both our natural environmental assets and infrastructure and skills base resulting from our long history in energy-related activity. The range of existing and emerging projects and assets is extensive, as illustrated in Figure 4-2:

Figure 4-2: Key energy assets:

South Hook LNG Terminal
STEP
Valero Oil Refinery
Pembroke Power Station
Wear Point Windfarm
Dragon LNG Terminal
Pembrokshire Demonstration Zone
At/near Pembroke Dock:
- Offshore renewable energy
- Catapult
- Marine Energy Centre of Excellence
- Marine Energy Test Area
SPECIFIC Innovation and Knowledge Centre
River Tawe Barrage
Dragon Energy Island
FLEXIS
Baglan Bay Power Station
University of South Wales Hydrogen Centre
Baglan Energy Park
Homes as Power Stations
Mynydd y Gwair
Alltwalis Wind Farm
Brechfa Forest Wind Farm
Dyffryn Brodyn Windfarm

4.3 Key renewable energy assets include the combination of marine energy activity associated with Pembroke Dock Marine and the proposed tidal, wind and potentially solar energy scheme at Dragon Energy Island in Swansea Bay. They also include a range of onshore wind and waste-from-energy schemes across the region, and a potential nuclear fusion prototype scheme in Pembrokeshire. The Hydrogen Centre at Baglan focuses on experimental development of renewable hydrogen production and storage, as well as R&D in hydrogen vehicles, fuel cell applications and energy systems. The Flexible Integrated Energy Systems (FLEXIS) project is delivering a smart energy demonstration zone in Port Talbot, focused on local energy systems, heat recovery and the adoption of low emission vehicles.

4.4 However, while the scale of activity is substantial, there is a risk that the potential may not be fully realised, for three reasons:

Technologies are, in some cases, at a relatively early stage. They are also complex, and in many cases will require long-term funding, commercially or from Government. Some of this will need to come forward in conditions of some uncertainty: for example, the Welsh Government's Hydrogen Pathway notes that "there is uncertainty regarding the exact role hydrogen will have in supporting decarbonisation in Wales.... [but despite this], there is still an urgent need to take the first steps to develop the skills, expertise and supply chain for hydrogen scale-up in Wales".
Competing areas and technologies may move faster within this dynamic technology environment. South West Wales has distinctive assets - but if additional capacity and investment is directed elsewhere, some of these advantages could diminish.
Local benefits are not automatically captured through the energy generation process. The good news is that there is a solid R&D base in South West Wales to capitalise on the opportunity (see, for example, the Hydrogen Centre referred to above; Swansea University's SPECIFIC Centre), as well as schemes (such as the Marine Energy Engineering Centre for Excellence project at Pembroke Dock) to build supply chain opportunities with SMEs. It will be important that these are driven hard, to ensure that the region benefits from the added value of renewable energy investment.

4.5 Delivering the region's renewable energy opportunities at scale - and ensuring that they are integrated with wider policy and maximise local benefits for local businesses and communities will be central to regional strategy over the coming years:

Key action areas

We will build capacity and expertise to maximise South West Wales' renewable energy and net zero potential.
- There are several public bodies with knowledge and expertise, including (for example) the Welsh Government Energy Service and Marine Energy Wales, as well as UK Government agencies such as the ORE Catapult. But the agenda is complex:
- establishing a regional 'decarbonisation system' could help to address region-wide goals (including in relation to skills and infrastructure) and coordinate investment priorities beyond the delivery of specific initiatives.
We will seek to secure new investment in renewable energy infrastructure
- Linked with the capacity building described above, we will work with the Welsh and UK Governments and with the private sector to make the case for investment in 'nationally significant' schemes such as Dragon Energy Island and the Pembrokeshire marine proposition, as well as smaller-scale schemes, including on public land.
We will work to deliver the Regional Energy Strategy
- The Regional Energy Strategy has been developed in parallel with this Plan and will be published in 2021. We will work to take forward pilot and successor Local Energy System projects (such as the pilot currently underway at Milford Haven Energy Kingdom), and we will seek to link the energy system objectives of the Energy Strategy with opportunities for local business engagement and supply chain development.

Decarbonising our industrial base

4.6 The high carbon intensity of some of South West Wales' industrial activity is a vulnerability: while the region's relatively high carbon emissions in the data is largely caused by the steel industry, oil and gas are also important to the region, as well as our large manufacturing base.

4.7 Work is currently underway to develop a programme for industrial decarbonisation through the South Wales Industrial Cluster (SWIC) initiative, funded by UK Research and Innovation and including several energy and heavy industrial firms in South West Wales (including Tata, Valero and RWE, the operator of the Pembroke refinery). The focus of the programme is on the production and use of hydrogen and on mechanisms to secure large scale industrial decarbonisation through 'fuel switching': as with some of the initiatives discussed above, the proposition is in its relatively early days, although achieving large-scale change will be important for the region's future competitiveness. More broadly, there is an opportunity to attract additional investment into the region, beyond the decarbonisation of the existing stock: 'transformational' projects such as the forthcoming Global Centre for Rail Excellence provide examples of investments supported with public funds, but the existing combination of energy-related activity will be an important factor in attracting new business locations.

4.8 Building on the region's growing presence in renewable energy and the current focus on industrial decarbonisation:

Key action areas

We will progress the opportunity presented by SWIC and seek to secure future investment to support the region's future industrial competitiveness
- As with other aspects of the low carbon agenda, technology is developing rapidly and the scale of investment in demonstration projects and initiatives such as SWIC is substantial. Through our increased capacity to drive forward the decarbonisation agenda, we will seek to secure sequential investment, working with the UK and Welsh Governments as appropriate.
We will grow the wider low carbon industrial base and promote the region's potential to new investors
- Linked with actions to promote the region as an investment destination, we will highlight our potential to new investors (including our university presence, skills base and access to sites and premises) and will press forward major proposed investments such as the GCRE.

Decarbonising the wider economy

4.9 Decarbonisation will extend beyond the industrial base, and will impact on housing and domestic heating, non-domestic properties and the transport network. Much is already underway:

In relation to the housing stock, Pobl Housing is leading one of the UK's largest community-based retrofit, energy generation and smart energy management projects at Penderry, Swansea, the outcomes of which will inform the larger, City Deal-funded Homes as Power Stations scheme.
In relation to transport, all the local authorities are engaged in programmes of fleet decarbonisation, and the Swansea Bay and South West Wales Metro will be at the core of the region's lower carbon, more sustainable transport system.
In relation to re-using and preventing waste, Wales already has some of the world's highest municipal recycling rates - with all South West Wales authorities (and Wales as a whole) experiencing a rapid increase in recycling rates over the past twenty years.

4.10 Linked with the Regional Energy Strategy, over the coming years:

Key action areas

Building on existing schemes, we will progress the decarbonisation of the housing and business stock
- From an economic development perspective - and our wider ambitions to secure a more 'embedded and resilient' business base, this should provide opportunities for local supply chain development and community-based employment solutions (as well as, in some cases, local community ownership).
We will press forward the development of Swansea Bay and South West Wales Metro
- As well as the Metro itself, this will lead to a better integrated and more sustainable transport network through the incorporation of bus and active travel services and the development of opportunities to work and access services closer to home.
We will work to achieve a circular economy
- Building on our performance in reducing waste and transforming recycling rates, there are opportunities to increase re-use of goods and materials offering potential for community-based solutions to increase repair and the use of technology to increase the scope for re-use of materials and reduced food waste.

5. Mission 2: Building a strong, resilient and embedded business base

Business is at the centre of our strategy to 2030: it will be through the expansion of existing firms and the start up and attraction of new ones that new employment will be generated and productivity growth secured. That means supporting sustainable business growth- both at the 'leading edge' of technology and innovation and across the economy.

Summary of assets, opportunities, challenges and actions

Current assets:

Strong university-industrial links
Local business networks, emerging clusters and some anchor businesses
Growing policy interest in encouraging locally 'embedded' businesses and local supply chains
Wales-wide institutions (for example Development Bank)

Next opportunities:

Supporting Dynamism (through entrepreneurship and early-stage expansion)
Supporting resilience (through technology adoption, management capacity and succession)
Supporting local supply chain development
Building an effective (and broad) innovation 'ecosystem'

Key challenges:

Weak 'infrustructure' offer (for example commercial propert, impeding start-up and expansion)
Skills and capacity challenges
Limited private sector support base
Access to growth finance
Barriers to commercialisation
Limited business density and 'leakage' out of region

Key actions:

Accelerated adoptions and innovation support (linked with recommendation of Wales 4.0 in relation to business, skills and innovation support)
'Progressive procurement' within a local business and supply chain development system.

Understanding the case for the Mission: the core rationale

5.1 The review of the evidence in Chapter 2 highlighted positive employment outcomes in recent years, growth in the business stock, and a strong record in translational research activities between the university knowledge base and industry.

5.2 However, the economy remains to some extent in a process of 'restructuring', away from traditional strengths in parts of the manufacturing sector and towards growth in areas such as information and communications and health care (as well as in activities linked with the growing energy sector highlighted in Mission 1). Changing trading relationships also present challenges (notably, but not only, in agriculture and food production), some of which have yet to fully work through).

5.3 This transition will bring opportunities within those sectors that are growing - and as highlighted earlier, opportunities for growth and productivity gain are cross-sectoral. However:

Even where job losses in one industry are replaced with jobs in another, there is the risk that they may not generate the same level of output (and therefore command the same pay).
The wider economy of South West Wales has a relatively narrow business base: business density is relatively low, and there are few indigenous large or larger medium-sized businesses. However, the prospect of inward investment at scale has reduced over the past twenty years. The risk is that as the economy evolves, losses may not be fully offset by gains, and the 'productivity gap' remains or widens.

5.4 In response, our Mission to create a "strong, resilient and embedded business base" seeks to encourage a continued focus on innovation and the growth of capabilities at the 'leading edge', balanced with an approach aimed at achieving greater resilience, growth potential and capacity for sustained employment across the region's wider business base, linked with the decarbonisation imperative in Mission 1.

Growing the innovative edge and accelerating diffusion

5.5 Innovation policy in Wales is at a point of transition, as the European funding that has sustained several major programmes (including the 'core' SMART programmes delivered via the Welsh Government45 and the wide range of sector or thematic schemes (such as, in South West Wales, ASTUTE and RICE46) come to an end; and the range of actors involved in innovation policy including, potentially, a more active role for UK Government), increases.

5.6 At the same time, there is a consensus, highlighted in a recent review for the Welsh Government, that the role of innovation policy has evolved, to be less narrowly focused on technology, and more embracing of actions focused on addressing social challenges (perhaps especially important given the growth of the health and care sector and the long-term demographic challenges highlighted in Chapter 2) and the impact of climate change47. The review also emphasises a need to further develop translational research activities and to link innovation support activity more clearly with the range of finance, advisory, networking and other programmes that contribute to a successful innovation 'ecosystem'.

"Today, innovation is about so much more than science and technology" - Future of Innovation Policy report

5.7 It will be important that regional activity in South West Wales adds value to and aligns with evolving Welsh national policy (and the wide range of programmes and institutions at UK level). Over the next few years:

Key action areas

We will explore a better-integrated regional innovation offer, in the form of a 'virtual Research and Technology Organisation' for South West Wales
- The universities are key regional assets and have a strong history of translational research with industry. However, the wider landscape is somewhat fragmented, and may become increasingly so as current programmes come to an end.
  We aim to achieve a model where there is "no wrong door", making the most of our university capabilities and enabling them to meet industry need. This could extend across a range of sectors and technologies, linked with (for example) future plans for the development of the research and development offer linked with Pentre Awel at Llanelli, and the close involvement of University of Wales Trinity St David and the development of Yr Egin and its associated creative cluster.
  It may also embrace wider innovation capabilities, including support in management skills and capacity and (linked with our wider approach to regional skills development) access to talent to enable innovative SMEs to reach their potential.
- There may be several options in taking this proposal forward - but the key point is that we maximise the value of our shared assets to deliver a joined-up service across government, higher education and the private sector.

Growing productivity and resilience across the economy

5.8 Across the wider business stock, there have been changes in the support landscape since the last Regeneration Strategy was produced. Nationally, Business Wales provides a central gateway to a range of support products, and since 2017, the Development Bank of Wales has consolidated publicly-backed loan and equity support into an 'arms-length' and widely recognised vehicle. In addition, the Welsh Government provides some direct investment (generally in relation to larger, often manufacturing firms), and all the South West Wales local authorities offer support services (in addition to the often university-linked innovation services highlighted above).

5.9 A recent review of the Welsh business support landscape highlighted three challenges, which are relevant to the strategy set out in this Plan:

First, Wales' relative vulnerability to economic shocks: a function of the continuing process of restructuring highlighted in the evidence base. This has contributed to the more recent policy focus on indigenous business growth. However, while economic 'shocks' are often seen through large 'one-off' events (plant closures, redundancy programmes, and so on), economy-wide technology-driven transformation is larger in its overall impact, and the ability to adapt and respond will be important across firm sizes and sectors.
Second, the scale of the support offer, and the relatively small number of firms that it reaches (the inference being that there is a much wider range of SMEs that could benefit from interaction with the support system, were the reach to be greater).

Third, dissemination of benefits, in particular the extent to which gains in business performance are captured in wages and tax and in which benefits to the supply chain accrue regionally. The Welsh Government has placed a greater emphasis on this in recent years, through the development of the 'economic contract' proposed in the Economic Action Plan.

5.10 Over the coming years, we want to create a better integrated system across local and national government, within which a strengthened 'support' offer is linked with the supply of skills and premises, the role of the public sector as a purchaser and commissioner within the local economy and in ensuring that there is widespread access to fair and sustainable work:

Key action areas

We will seek a better co-ordinated support package for business
- The scope of this, and the interaction between delivery at different geographical levels, will need to be explored. But the proposition is that there is a need to drive business density, start-up rates and entrepreneurship, and resilience and 'adaptability' to change across the SME base - recognising that 'enterprise' embraces a range of organisational types and ownership models .
We will link this with public sector purchasing power
- Recently, there has been a focus on the role that public procurement can play in supporting local economic growth. This has been reflected in the Welsh Government's review of procurement, which has explored the concepts of 'community wealthbuilding and the 'anchor institutions' in the procurement process , and the South West Wales local authorities are all committed to the proactive and progressive use of procurement.
  The aim here is to ensure that local SMEs are able to successfully tender for work (linked with the business support offer above), and to use this as a springboard for future growth.
We will invest in bringing forward access to sites and premises.
- The evidence shows that there is a persistent market failure in the delivery of commercial property. This has the effect of blocking the expansion of local SMEs (as well as presenting a barrier to attracting larger investors). Across the local authorities and Welsh Government, we will seek to bring forward development on the region's key strategic sites at Baglan, Port Talbot Waterfront, Fabian Way, Felindre, Cross Hands and the Haven Waterway, as well as within the wide range of smaller sites that will help to support distributed growth across the region, consistent with our wider decarbonisation objectives.
  We will also work to bring forward new city centre office accommodation in Swansea city centre, building on recent investment and continuing the city's transformation.
We will actively promote South West Wales as an investment location
- While the focus of this Mission is on growing our locally-based business stock, inward investment has historically been important in South West Wales, and it remains a key driver of skills and employment and a source of demand for local suppliers.
  We welcome new investment: we will actively promote the region's assets (linked with its quality of life and visitor economy offer described in Mission 3) and we will work with investors to ensure access to skills and supply chain links, embedding them further in the local economy.
We will continue to invest in the region's skills capacity
- Recent years have seen an improvement in the region's skills profile, and we have a strong track record in building an understanding of employer demand and linking it clearly with provision.
  Alongside the measures within this Plan to increase skills demand and employer engagement, we will continue to invest in strengthening supply at all levels, through specialist infrastructure, investment in access to employment and a continued focus (building on the region's Skills and Talent Programme) on responding to local economic demand and opportunity.
Across all our actions, we will improve access to fair and secure employment
- Despite the region's success in creating jobs, economic inactivity remains higher than in the rest of the UK. While in-work poverty is a significant issue - and one which our focus on productivity and resilience across all sectors seeks to tackle - there is strong evidence that being in work supports positive outcomes across a range of measures.
  Building on our experience of successful programmes such as Workways+, we will ensure a range of support to enable people to enter and progress in the labour market.

6. Mission 3: Growing and sustaining the South West Wales 'experience' offer

South West Wales enjoys a superb environment and a unique 'quality of life' offer. This is a key asset for the region, and one which we must protect and enhance. We will make South West Wales known for the quality and breadth of its 'experience offer', bringing together urban and rural environmental quality, 'quality of life' and culture. This will support a high-value visitor economy - but it will also be locally owned and a central part of our investment proposition.

Current assets:

Unique combination of assets (natural environment; sport and leisure opportunities, urban and rural mix; unique cultural and heritage character)
Important existing tourism offer, closely linked with environmental quality

Next opportunities:

Securing increased value from 'South West Wales experience', in the context of increasing demand for quality and sustainability and growing opportunities for dispersed and remote working.
Building and raising awareness of the local 'brand'

Key challenges:

Balancing economic, environmental and community sustainability considerations
Counterveiling pressures on town and city centres as they need to repurpose in the light of structural change

Key actions:

Targeted and coordinated capital investment, including in town and city centres
Balance of initiatives at regional, local and community-driven scale

Understanding the case for the Mission: the core rationale

6.1 South West Wales' 'experience offer' is a key strength. It is also multifaceted and interlinked: while it includes the region's substantial visitor economy, it recognises that the visitor economy is itself dependent on the quality of the region's cultural and environmental offer. At a national level, this is reflected with the statement of 'Wales' core offer' within the Welsh Government's Priorities for the Visitor economy (set out in Figure 6-2). This highlights the importance of 'sense of place' within the Welsh offer, with the visitor economy helping to act as a showcase for local food and drink and celebrating the Welsh language as a central part of local and national identity.

6.2 In South West Wales, the range of experiences the region has to offer is diverse and impressive. It is this diversity that provides much of the region's distinctiveness: the proximity of the university city of Swansea to the beaches of the Gower for instance, or the region's range of landscape types (including the Pembrokeshire Coast and Brecon Beacons National Parks) and network of smaller rural towns. This also makes the region attractive as a place to live, and ought to be a central part of the region's investment proposition. This Mission focuses on investment in the 'experience economy' and how we can promote it to new and diverse audiences.

**Wales' core offer**
Outstanding landscapes, protected and cared for Accessible, protected natural landscapes - offering meaningful, high-quality and contemporary wellbeing experiences.	Vibrant communities and a creative culture An authentic but highly creative and contemporary urban and rural culture and heritage offering, co-created with locals and valued by visitors.	Epic adventures and activities for everyone Innovative, world-leading adventures, events and activities - that bring our post-industrial and natural landscapes to life and promote healthy living for all
A unique Welsh welcome We will also do more to develop and promote a unique Welsh welcome - based on promoting characterful places to stay and local food and drink experiences across Wales.
National Experiences such as The Wales Way

Investing in our experience economy

6.3 The 'good news' is that several visitor economy trends coincide with some of South West Wales' inherent strengths: in particular, the increased interest in sustainability, green tourism and nature and a desire for 'authentic' experiences. These, and the inherent value of local communities and identity, form part of the wellbeing 'offer' to residents as well. However, with the exception of Swansea, all parts of the region are forecast to see falling working age populations over the next twenty years. New employment opportunities should help to reverse this - but there is also an opportunity through the acceleration of remote working and increasing flexibility to retain more of our young people and university graduates, and to attract a wider demographic to the region.

6.4 Over the next decade, this will mean investment focused both on the quality of the visitor offer and the appeal of South West Wales as a place to live and work - recognising that these are inherently interconnected:

Key action areas

We will invest in the region's 'experience infrastructure'
- We will seek to broaden the range of attractions and opportunities across the region, especially where they contribute to an increasingly sustainable offer, linked with the region's heritage (including in relation to local food and drink produce), culture and natural environment. This will include ensuring that the delivery of key national initiatives (such as the proposed National Forest) contribute to our wider economic ambitions.
We will invest in our city, town and community centres
- Our towns and cities are the gateways to our region, and the focal points for community, commercial and civic life. Much investment has taken place and much is underway - with (for example) the Swansea Arena and its bridge link to the city centre opening in 2021, creating a further milestone in the city's regeneration. However, there is more to do: across the region, many of our town and community centres have been impacted by structural change in the retail sector - with the process of repurposing requiring complex action on a number of fronts.
- Building on our experience of working together across the region, and in the spirit of the Welsh Government's Transforming Towns initiative, we will prioritise further investment in our town and city centres, ensuring that they are sustainable focal points for the long term.
We will make the 'experience economy' work for everyone
- Not all parts of the region benefit from the excellent quality of life that the region has to offer - and in some places, our ability to retain and attract younger people is impacted by deteriorating housing affordability (an issue which has the potential to worsen further in an economy increasingly characterised by remote working). Linked with our decarbonisation and net zero objectives, we will continue to invest in affordable housing solutions and long-term community renewal.

Promoting the region

6.5 The quality of South West Wales' assets present an opportunity to better promote the region - to visitors and investors and to raise the region's profile on the wider stage. This should extend to encompass the renewable energy potential and industrial opportunities highlighted earlier: the region's future in a greener economy (and the opportunities that presents) combining with its cultural and environmental quality:

Key action areas

We will take a more coordinated approach to promoting the South West Wales opportunity
- Recognising that each part of the region has a distinct identity and 'brand', we will work to ensure coordination across the visitor, education, local produce and investor marketing channels to ensure that South West Wales has a clearer 'external' profile and a complementary offer.
We will invest in quality
- Welcome to Wales, the Welsh Government's strategy for the visitor economy, places a strong emphasis on quality of the whole experience offer - accommodation, food and drink, the public realm, environment, and so on - as the route to a higher-value, more sustainable economic base. Across all of the actions above, we will invest - with business - in quality and excellence.

7. Moving forward: Delivering the Plan

This Plan provides a framework for taking forward the priorities that we have identified in our Ambitions and Missions over the long term. Delivery will depend on a range of investment sources and the coordination over time of specific projects which combine to deliver our objectives. This chapter explains our approach to funding and delivery, and how we will prioritise and monitor our progress.

From a framework to a pipeline of complementary projects...

7.1 This Plan takes a long-term view. Recognising that new opportunities will emerge over time, it is intended to be flexible, with specific actions described at a relatively high level.

7.2 To convert these into practical interventions, we have prepared a project pipeline. This sets out a schedule of interventions, describing how they contribute to our Ambitions and Missions, their current development status and the actions that need to be taken to bring them forward. This will be kept 'live' and will be regularly reviewed by regional partners. This will enable new interventions to come forward where opportunities arise (for example, commercial proposals may lead to propositions that have not yet been identified), and for project information to be updated as schemes progress.

7.3 The projects within the pipeline are at different stages of development. Consistent with the approach used by HM Treasury and the Welsh Government (and adopted by the City Deal), projects will be brought forward through the business case process set out in the 'Green Book' appraisal guide. In summary, this means that projects will be considered against the following headings:

**Project business case considerations**
Consideration	Description
Strategic fit	How strong is the evidence of economic demand or need? Does the project add 'net regional value' (such as, is it additional to activity already taking place in the region, and if there is any duplication, is this mitigated?) Does the project contribute to the overall strategic framework (such as, will it support delivery of an economy that is "resilient and sustainable; balanced and inclusive; and enterprising and ambitious"?
Options appraisal	Have a range of options been considered, and is there a clear case for the preferred option?
Value for money	Does the project represent good value, in terms of the outputs and outcomes it will achieve, relative to anticipated public costs?
Affordability	Does funding for the project exist, and/ or is there a clear route to funding? Is the funding model compliant with Subsidy Control and other regulations?
Deliverability	Have procurement options been considered and is there a clear route to successful procurement? Are governance and management arrangements in place, and is there sufficient delivery capacity?

It will be important that the action plan is seen as a dynamic document and that it is regularly updated by partners. In broad terms, projects include:

Region-wide initiatives to build capacity to take advantage of the opportunities identified in the Plan. These are highlighted within each Mission, and include:
- Building capacity and expertise to maximise South West Wales' 'net zero' potential
- The creation of a 'virtual innovation agency' to coordinate and galvanise links between industry and the knowledge base, especially as European funding comes to an end
- Support at scale for enterprise and entrepreneurship
- Public investment in the commercial property offer, to enable investment, business growth and greater environmental sustainability
- Delivering a coordinated approach to investment marketing and support, linked with the 'experience' economy.
High profile strategic capital investments, such as the Swansea Bay and South West Metro

7.4 Major local projects contributing to the overall objectives and Missions. Not all will directly benefit all parts of the region. However, in aggregate they will offer substantial regional benefit.

Funding the Plan: A longer-term investment fund

7.5 Funding to take forward the Regional Economic Delivery Plan and its component projects will come from multiple sources, and some individual funding packages are likely to be complex. At the time of writing, there is some uncertainty regarding future funding, as European sources (historically an important part of the funding mix in South West Wales) draw to a close. However, potential sources may include:

Private investment, especially in bringing forward some of the energy related investments set out in relation to Mission 1, and in respect of major regeneration and development schemes
The proposed Shared Prosperity Fund (or alternative successors to the European Structural Funds)
Joint investment across the local authorities, or between the local authorities and the Welsh Government
UK Government funds (such as the Strength in Places Fund and the Levelling Up Fund).

Key action areas

We will seek to secure a devolved regional Investment Fund
- The nature of the funding sources identified above will change over time. However, given the scale of the opportunity (and the regional challenge) in South West Wales, we will seek to secure a devolved regional investment fund, which would offer the region the ability to lever in additional funding and bring projects forward on a flexible basis. Such a fund could be structured to give a partial financial return on investment, as well as an economic and social return, depending on the nature of the project.
  This would require investment expertise and capacity, but could lead to the development of a regional portfolio of projects, derived from the emerging project pipeline and building on the successful implementation of the existing City Deal. Currently, the projects within the pipeline have a total value of around £3 billion over the coming decade: while costs will be determined through the business case process, this provides an indication of the scale of the challenge and opportunity ahead.

Monitoring progress

7.6 Our proposed projects are all currently at different stages of development. Through the business case process, we will set out a series of performance indicators against which progress can be monitored. These are likely to include:

**Indicative performance measures**
Indicator	Description
Private investment	Additional private investment secured in the region as a result of public support through the REDP
Gross value added	Estimated additional GVA generated as a result of investment
Firm creation and survival	New business starts as a result of REDP-backed activity and survival rates over time
Jobs	Jobs created and safeguarded as a result of investment. The REDP emphasises the quality of jobs (in line with the Economic Contract) and this should be reflected in the performance measure (for example, employment at or above Real Living Wage and sustained over time).
Access to employment	People entering employment (or increasing hours) as a result of intervention
Innovation	Research and development into new products, goods and services as a result of intervention. Adoption of 'new to the firm' products or processes as a result of intervention
Carbon reductions	CO2 savings as a result of investment
Modal shift	Increased journeys on public transport/ increased use of active travel as a result of investment.
Visitor spend	Increased visitor spend as a result of investment

Governance

7.7 The Regional Economic Delivery Plan will be 'owned' and overseen by the South West Wales Corporate Joint Committee (CJC). This will be one of four CJCs established in Wales under new legislation, enabling the constituent local authorities to exercise joint functions relating to strategic planning, transport and measures that will improve the economic wellbeing of their regions.

7.8 Supporting the CJC, the Regional Regeneration Directors will keep track of progress and will be responsible for developing business cases, securing investment and ensuring delivery on the CJC's behalf. It will be important to secure sufficient capacity - within individual partner authorities and jointly - to do this, given the scale of the opportunities and challenges. The CJC will also establish mechanisms for a strong non-government voice (for example, from business and the third sector) in influencing priorities and maintaining oversight.

Annex A: Summary SWOT analysis

A.1 The Evidence and Strategic Landscape Review prepared to inform this Plan contained an analysis of the region's strengths, weaknesses, opportunities and threats. This formed the basis for the analysis within Chapter 2 of the Plan, and is summarised below:

Strengths	Weaknesses
Nationally and internationally significant university research assets, with a strong record of industrial collaboration in the region and recent and planned investment in new university facilities Outstanding natural environment, supporting quality of life and a distinctive location proposition for visitors and investors Relatively strong record in job generation and in increasing economic activity Some established sectoral strengths (for example., engineering and advanced manufacturing; food production) Some major site development opportunities Growing and diverse SME base Community strengths and capacity and strong sense of identity	Projected decline in working age population and rising dependency ratio •Relatively low productivity, reflected in relatively low wages Relative peripherality, leading to weak transport and digital connections in some places, and viability constraints on physical developments Few large firms and company headquarters Some constraints on firm expansion, linked with workforce skills shortfalls (although qualifications levels are rising) and limited commercial property options Market change impacting on viability and vitality of town and city centres Persistent concentrations of disadvantage
Opportunities	Threats
Talent pool generated by the region's universities and further education system; opportunity to retain and grow the skilled workforce and business stock Opportunities for growth in areas of activity relevant to the region's historic strengths (for example, advanced manufacturing) and in current research and technology capabilities Opportunity for location-specific growth in the energy sector and in decarbonisation more broadly Distance might become less important as remote working becomes 'normal' (potentially increasing the appeal of SW Wales' quality of life offer and helping to change perceptions Closeness to the natural environment and ability to offer unique sporting, cultural and environmental offer - helping to retain and attract young and talented people	High carbon intensity of part of the industrial base Risk of loss of major employers, with potentially significant labour and spatial impacts Risk of outflow of talent and of younger workers, if there are insufficient opportunities locally Wider Brexit-related uncertainties relating to export markets, port-related activity and future farm payments Impacts of the Covid-19 pandemic, including higher unemployment as mitigation measures wind down and accelerate changes in the role of High Street/ town centre functions Risk that existing inequalities could be exacerbated.

Strengths

Weaknesses

Opportunities to build on a track record of collaboration between the public sector, academia and industry
Potentially significant infrastructure investments (for example., Swansea Bay Metro)
Economic policy innovation in Welsh policy context
Major site opportunities (for example, Baglan Energy Park) and ambitious plans for investment and development, including as part of Swansea Bay City Deal
Opportunities for business innovation

Annex B: Well-being of Future Generations Act assessment

Contribution to the Well-being Goals

B.1 The Wellbeing of Future Generations (Wales) Act 2015 (WFGA) identifies seven Well-being Goals: a Prosperous Wales; a Resilient Wales; a Healthier Wales; a More Equal Wales; a Wales of Cohesive Communities; a Wales of vibrant culture and thriving Welsh language; and a Globally Responsible Wales. Guidance on the application of the WFGA states that policy should seek to contribute to all seven Well-being Goals, not just the one that most closely approximates to the central purpose of the initiative.

B.2 The table below summaries how this Plan contributes to the Well-being Goals:

**Contribution of the REDP to the Well-being Goals**
Goal	Contribution
A Prosperous Wales	Direct contribution The Plan contributes to increasing productivity and economic growth, to support the creation and safeguarding of more, better paid jobs, opportunities for business starts and growth, and further links between the knowledge base and industry.
A Resilient Wales	Direct contribution The Plan places an increased emphasis on economic sustainability through focus on the need to decarbonise the economy; resilience to future technology change through emphasis on responding to and harnessing digitalisation
A Healthier Wales	Indirect contribution The Plan is not directly concerned with health matters. However, greater prosperity (especially where more equally distributed) leads to better health outcomes. The Plan also notes the importance of the health and care sector and the opportunity to link it with economic growth.
A More Equal Wales	Direct contribution The Plan recognises the need to build an 'inclusive growth' model into the strategy, via efforts to support skills outcomes, resilience to automation, or mechanisms to support greater wealth retention within the community
A Wales of Cohesive Communities	Indirect contribution Better economic inclusion outcomes should improve cohesion, where linked with programmes and mechanisms that focus on local community involvement and engagement.
A Wales of Vibrant Culture and Thriving Welsh Language	Indirect contribution Measures to support the growth of the creative economy (including associated with the Welsh language) should directly support, and could be an important part of the SW Wales investment proposition. More broadly, the Plan seeks to support the economic vibrancy of the region, including principally Welsh-speaking communities.
A Globally Responsible Wales	Indirect contribution Achieving over time a decarbonised growth model will contribute to this The Plan also highlights openness to new ideas (and investment) from elsewhere

**Delivering against the National Well-being Indicators**
Indicator	Route to impact: Enabled through...
04. Levels of nitrogen dioxide pollution in the air	Large scale decarbonisation (Mission 1)
08. Percentage with adults with qualifications at different levels of the National Qualifications Framework	Measures to raise the supply of workforce skills, and improved engagement with employers, over time (across all Missions) Measures to raise demand for skills (across all Missions, but especially relevant to Missions 2 and 1)
09. Gross value added per hour worked relative to UK average	All Missions. This is a measure of productivity, which the Plan overall seeks to address. Note however that 'success' in achieving a relative measure in respect of the rest of the UK depends on the pace of growth elsewhere in the UK (hence the challenges in 'closing the gap' without very large-scale investment)
10. Gross disposable household income per head	All Missions. Note however that this data is not available at the South West Wales geography (it is published at ITL 1 and 2)
11. Percentage of businesses which are innovation active	Measures to increase interaction between business and the knowledge base, and to strengthen the innovation ecosystem (principally Mission 2)
12. Capacity (MW) of renewable energy equipment installed	Developing our renewable energy potential (Mission 1)
16. Percentage of people in employment who are on permanent	Measures to increase economic activity and the supply of higher paid employment. Delivered across all Missions.

The Welsh Government has adopted 46 National Indicators, against which progress against the goals of the Well-being of Future Generations Act can be measured. As set out in the core of the REDP, while increasing productivity (gross value added per filled job, or hour worked) is an important measure, success will be measured against a number of other indicators as well. The key relevant indicators are listed below (with the number against each one corresponding to the indicator number published in the Welsh Government list), along with a description of how the Ambitions and Missions in the Plan are likely to contribute to their achievement:

**Assessment of contribution to meeting the National Well-being Indicators**
Indicator	Route to impact: Enabled through...
contracts (or on temporary contracts and not seeking permanent employment) and who earn more than 2/3 of the UK median wage)
18. Percentage of people living in households in income poverty relative to the UK median	Measures to increase access to employment, especially at higher rates of pay. Across all Missions
21. Percentage of people in employment	Key measure of economic success; relevant to all Missions
22. Percentage of people in education, employment or training measured for different age groups	Measures to improve access to, and demand for, education and training (across all Measures)
26. Percentage of people satisfied with their area as a place to live	Consequential measure arising from the success of measures to improve 'quality of place' (especially relevant to Measure 3)
33. Percentage of properties with adequate energy performance.	Measures to achieve a 'net zero' economy and to improve the energy efficiency of the housing stock as part of that (Mission 1)
42. Emissions of greenhouse gases within Wales	Measures to support decarbonisation (Measure 1)

Annex C: Developing the Plan: The process

C.1 The Regional Economic Delivery Plan was developed in 2021 with the support of SQW, through a sequential process that worked from a fresh analysis of the economic evidence to identify the key opportunities and challenges facing the region, and based on that, the Ambitions and Missions reflected in the Plan:

Phase I resulted in the development of a detailed Evidence and Strategic Landscape Review. This provides an overview of the region's economy and the policy context, informing an overall WOT
analysis. The Evidence and Strategic Landscape Review has been produced as a separate supporting document and informed the analysis in Chapter 2 of this Plan.
Based on the outcomes of Phase I, Phase II involved the preparation of a 'strategic framework' for the Plan, which identified the set of Ambitions and Missions that we have set out. As part of this, we analysed the outcomes of the SWOT analysis to consider the region's distinctive challenges, and we developed a series of future scenarios.
In Phase III, we developed an initial pipeline of projects to meet the goals of the Ambitions and Missions. This involved a 'call for proposals' with the South West Wales local authorities and other stakeholders, and the development of a Project Pipeline Supplement, which will be kept 'live', as set out in Chapter 7.
Based on the outcomes of the preceding phases, Phase IV involved the finalisation of the Plan, which was produced in draft in August 2021.

Developing the plan: phases

Phase 1: Developing the evidence base
Phase 2: Strategic framework
Phase 3: Action planning
Phase 4: Finalising the REDP

Consultation and engagement

C.2 The development of the Plan was led by the South West Wales local authorities, and regular dialogue took place with a steering group involving the four authorities and the Welsh Government, and with the Regional Directors. The strategic framework and contents of the Plan was also considered by South West Wales Leaders and Chief Executives.

In developing the Plan, consultation took place with over 50 stakeholders from business, local and Welsh national government, leaders within the region's Enterprise Zones and local business partnerships, and the third sector. This included bilateral consultations throughout the process; discussions at county-level economic partnership boards, the Regional Learning and Skills Partnership, and the Economic Strategy Group of the Swansea Bay City Deal; and a stakeholder consultation workshop which took place in June 2021.

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