Inside South Yorkshire’s £50 million ‘sweetheart deal’ for Boeing

Good afternoon readers — and welcome to today’s Tribune.

The Advanced Manufacturing Research Centre is one of the jewels in South Yorkshire’s crown. So, when a brand new high-tech factory backed by aeroplane manufacturer Boeing was announced for the site in July, it was a big deal. Project Compass was billed as a big investment by one of the world’s largest companies in the economy of South Yorkshire, but we’ve found that the reality doesn’t quite support that claim. Thankfully, the discrepancy seems to be more cock-up than conspiracy. But have the politicians of South Yorkshire really brokered a great deal? Or are you, the taxpayer, footing the bulk of the risk?

Editor’s note: To be honest, I’m still struggling to believe it, but thanks to you, The Tribune added an astonishing 350 new paying members in November and December — including an amazing 85 gift subscriptions. Welcome to you all. As usual, this, our second members’ newsletter of the week, is being sent out to all subscribers but only paying members get the full story. This is a fairly transparent attempt to get some non-paying subscribers to join up as full members. Why do we keep harping on about subscriptions? Our paying members cover everything we do here: their subscriptions pay our writers, editors, our office costs and the price of lawyers when we get sent a particularly menacing legal letter (an ever-present danger when you regularly publish investigations, which we do — and which is key to holding corruption, mistakes or abuse to account). Currently, we’re small but scrappy. I’d like us to be a proper newsroom, with a full staff. Please help us get there by hitting the button above if you don’t already subscribe.

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🗳️ Miriam Cates is under investigation by the parliamentary standards commissioner for a Covid rule-breaking lockdown party, it has been revealed. A piece in MailOnline from before Christmas says the Penistone and Stocksbridge MP is alleged to have attended the party in December 2020 along with several other MPs and peers, in contravention of Covid rules in place at the time which forbade socialising indoors. The Mail piece says alcohol and cake were available at the party and that during the evening social distancing rules “went out of the window”. In attendance (as well as Mrs Cates, allegedly) were Bernard Jenkin MP, his wife Baroness Anne Jenkin, Dame Eleanor Laing and Virginia Crosbie MP, whose birthday party it was. The parliamentary standards commissioner opened the investigation into all five before Christmas stating that they were alleged to have caused “significant damage to the reputation of the House as a whole, or of its members more generally”. If the commissioner upholds the complaint, Cates could be suspended from the house. If this suspension lasts 10 days or longer it could trigger a recall petition and potentially a by-election. Mrs Cates hasn’t confirmed if she attended the party and did not respond to requests for comment.

💉 100 years ago, the wealthy Sheffield philanthropist Sir Stuart Goodwin became the first person in England to be treated with insulin for type 1 diabetes, revolutionising the treatment of the disease. At the time people with diabetes lived on average for two years, and could only be treated with a starvation diet of 400 calories a day. However, after Goodwin (who gave his name to the fountains which once stood at the top of Fargate) was treated in his 30s at Sheffield Medical School, his condition was transformed and he lived until he was 83.

🏙️ Should a new city be built near South Yorkshire? Our data and policy writer Daniel Timms seems to think so. He’s currently on paternity leave but has managed to fit in time between nappy changes to write about what he thinks could fix Britain's chronic productivity problem. He says the new city, which should aim for a population of around 400,000 in 50 years, could be built on land east of Retford, an area which suffers from low productivity now but actually has good transport links and is well placed to capitalise on the UK’s biggest boom industry: logistics. Have a read of his proposal here and let him know what you think in the comments.

Things to do

🎭 On from now until Sunday at Sheffield City Hall is the Manor Operatic Society’s annual pantomime, Robin Hood and His Merry Men. Follow the iconic outlaw and his hilarious band of men on a magical adventure through Sherwood Forest. This brand new show is packed with laughter, music, special effects and dancing, plus the society’s famous dough throwing, the fun bucket game and, of course, Tiddly Winky Woo. Tickets are priced from £14 to £26.

👚 This Saturday, Worth the Weight are bringing the UK’s biggest vintage kilo sale to Sheffield. Taking place at a warehouse on Manton Street on the edge of the city centre, the event will feature nine tonnes of vintage clothing from the 60s onwards, with each kilo costing just £15 (large items like coats are also limited to £15). Stocks will be replenished during the day so the shelves will always be full. The event is free and takes place from 9am-5pm.

🍿 This month, the Showroom’s latest film season features the movies of legendary director Michael Mann. The nicely-titled ‘Mannuary’ starts with the director’s latest film, Ferrari, a biopic about the founder of the iconic supercar brand. This will be followed by Thief, Manhunter, Heat, Miami Vice and finally Blackhat. Each screening will be preceded by a short video introduction by staff member Max Marriott, who selected the season as his Showroom Spotlight.

Inside South Yorkshire’s £50 million ‘sweetheart deal’ for Boeing

In July last year, Chancellor Jeremy Hunt travelled to the Advanced Manufacturing Research Centre in South Yorkshire to make a very special announcement. Hunt revealed that our region was to become the UK’s first investment zone, a flagship government policy to attract jobs and investment to areas in need of Levelling Up. As a result South Yorkshire would receive £80 million in government funding, money which would, it was claimed, attract £1.2 billion worth of investment to South Yorkshire over the next 10 years.

Dovetailing neatly with the investment zone announcement was another big reveal. Flanked by South Yorkshire Mayor Oliver Coppard and Maria Laine from the aeroplane manufacturer Boeing, Hunt announced the first stage of the process of the region becoming an investment zone: adding Compass, a new research and development extension to the University of Sheffield’s Factory 2050 facility on the site of the old Sheffield airport. (For the uninitiated, Factory 2050 is a high-tech factory at the AMRC that’s almost like a showroom: top politicians are taken round it in the hopes that they will leave dazzled by our region’s manufacturing excellence).

The Compass project is tasked with dramatically accelerating the build time of commercial aircraft using lighter composite materials, thus reducing fuel consumption in the aircraft of the future. “Our first Investment Zone is a shining example of how we will drive growth across the country,” the Chancellor is quoted as saying. “It’s already secured more than £80 million of private investment, including backing from Boeing, and will help support more than 8,000 jobs by 2030.”

Understandably excited, the Mayor took to Facebook. He said the investment zone would put Sheffield, Rotherham, Barnsley and Doncaster at the forefront of innovation-led growth across the UK by turbo-charging research, jobs and investment. “And it starts today with an £80 million investment from The Boeing Company,” he continued. “Who I’m proud to say will now be developing the next generation of lightweight aircraft technology here in SY.”

I know how easy it is to become confused by all the facts and figures that are bandied about when announcements like this happen. But Coppard’s claims, like Hunt’s reported quotes before it, don’t tell the full story. However, eye-catching claims like this have a funny way of sticking around once they are made. In the minutes of the Combined Authority Board on 31 July, the Mayor welcomed the new investment zone “alongside the news that Boeing would also be investing a further £80m in the region”.

A flurry of press releases sent out at the same time by the government, the university, the AMRC and Boeing do give more details on the sources of the funding. Rather than coming entirely from the private sector, or entirely from Boeing, the £80 million was in fact to come from a wide array of organisations, both public and private. These include a £29.5 million grant from the Aerospace Technology Institute (ATI), a government body charged with boosting the UK aerospace sector. And a further £20 million South Yorkshire Mayoral Combined Authority (SYMCA), Sheffield City Council, University of Sheffield and the High Value Manufacturing Catapult. Of this, according to the minutes of the SYMCA board, the combined authority put in £7 million, the same amount as contributed by Sheffield City Council. It was also revealed that the £20 million from SYMCA, Sheffield City Council, the University of Sheffield and the High Value Manufacturing Catapult will pay for the factory itself while the £30 million from ATI will be used to kit the factory out with state of the art equipment.

This leaves £30 million unaccounted for. The Tribune understands that this sum will come from the private firms involved in the project — Boeing, Spirit AeroSystems and Loop Technology — who will fund a four-year research and development programme which will employ 50 people at Compass. When we asked Boeing how much they would be contributing, they said they weren’t able to do so due to “commercial sensitivities” but added “the remaining funding [came from a] combination of Boeing, project partners Spirit AeroSystems and Loop Technology, and UK Government”. The AMRC and the High Value Manufacturing Catapult weren’t able to tell me how much money they had contributed either.

When we asked SYMCA and the Treasury for clarification, SYMCA acknowledged the Mayor had made a mistake on social media by saying the Compass money was coming from Boeing in its entirety, while the Treasury said the Chancellor had been misquoted. SYMCA said a press release they issued the day before Mr Coppard’s posts makes it clear the £80 million total cost of Compass includes significant public funding. The Treasury said that a press release on the AMRC website misquotes the Chancellor as saying the Compass money is private investment (on the Treasury website the word private is absent).

You might say that any investment is good investment, and that The Tribune shouldn’t be quibbling about where exactly this money is coming from. But the big question is how will the £14 million local authority and mayoral investment in research and development benefit Sheffield and South Yorkshire? An additional question those really clued up about funding structures might be asking themselves is about the public pronouncements versus the reality. Since ATI and HVMC are both arms of the UK government — and as such, their contributions are also funded by taxpayers’ money — when you tot up the public contribution, it becomes clear that the financial situation is rather different than the one outlined by Hunt and Coppard in July. A project that was originally billed as having £80 million of private investment behind it has somehow ended up being two-thirds funded by the taxpayer. The press releases and public statements the SYMCA and the AMRC gave at the time of the announcement give the impression of being heavily spun.

One industry insider told Tribune: “This is an incredibly big win by the AMRC and an even bigger one, based on these figures, for its two American aerospace partners. On these figures it looks like taxpayers are shouldering the bulk of the capital financial burden and risk. Even if the Compass project is successful — and that is no slam dunk — what guarantees have Sheffield City Council and SYMCA secured that a new aerostructure production facility will land in their patch?”