6. Prosperity for business
Overview
East Sussex’s business stock is dominated by small and micro enterprises, with an orientation towards local demand-responsive activities and the visitor economy. But there are some outstanding businesses and emerging areas of strength. The strategy focuses on ensuring a flourishing micro-business environment, encouraging firms to scale up, remaining attractive to responsible investment and adapting effectively to the challenges of climate change.
Areas for intervention relate to ensuring a sustainable and appropriate land supply pipeline is in place, developing business networks and providing support for innovation and growth.
Introduction
Consistent with the overall Vision, Prosperity for Business defines a first key Priority Area in delivering the Economic Prosperity Strategy.
Context, challenges and opportunities
Within East Sussex, there are currently some 23,000 enterprises. In all parts of the county, the vast majority of these are small and the overall size distribution is very similar to the regional and national averages. Within East Sussex, the business stock has grown over recent years; in 2010, the total number of enterprises was around 20,000, some 3,000 fewer than today. Again, this is a pattern seen nationally (driven in part by structural changes). The overall rate of growth in the stock of enterprises however has been lower in East Sussex than across the South East region as a whole.
Within this context, East Sussex has a very distinctive sectoral structure of both business stock and employment:
- Two broad sectors are over-represented (relative to the regional and national averages): accommodation and food services (which has very close links to the visitor economy); and human health and social work activities.
- Conversely, under-represented sectors include information and communication; professional, scientific and technical activities; and (to a lesser extent) manufacturing.
This broad pattern is both distinctive and clearly recognisable. It suggests specialisms in sectors which are linked strongly to the characteristics of the local population and/or to the visitor economy. Conversely, the overall incidence of activity in high value growth sectors is quite limited. In seeking to achieve the overall Vision of the Economic Prosperity Strategy, the structural make-up of the East Sussex economy is important and challenging, and it highlights the importance of growing a more balanced economy to achieve sustainable prosperity.
Nonetheless, while this overall assessment is grounded in evidence, within East Sussex there are some outstanding businesses (or groups of businesses). In the south east of the county there is, for example, a small but distinctive cluster of businesses with specialisms in vacuum technologies and advanced engineering. There is also a growing specialism in viticulture – which signals high value primary production whilst also delivering place-related benefits (given links to the visitor economy), and which is underpinned by the skills and development offer at Plumpton College. In Eastbourne and (increasingly) Hastings, there are many creative businesses – some with links to Brighton and London – which appear to be thriving. In the east, there is a small, but locally significant, fishing specialism. Through one large company, insurance is a major focus in the Bexhill area.
Evidence box
- The vacuum cluster in East Sussex
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East Sussex’s important presence in vacuum technology began in the 1960s, when Vacuum Generators (now VacGen) opened a factory at St Leonards-on-Sea. Since then, a cluster of firms has emerged: this is especially concentrated around Hastings and Bexhill, with key companies including Kurt J Lesker, HiVac Engineering, Torr Scientific and Photek, as well as VacGen itself, which is headquartered at Hailsham.
Many of the applications of vacuum technology are at the leading edge of innovation, with applications including optical coatings, semiconductor electronics and fundamental physics research. The sector is also globally focused and has a high demand for advanced technical skills locally. Ensuring that these can be met locally will be key to the sector’s future as a driver of growth in East Sussex.
Across East Sussex, there are examples of innovative, creative and highly successful businesses. But in the round, there are just not enough of them given the scale of both ambition and challenge that sits at the core of the Vision for the economy county-wide.
Priorities looking ahead
Over the next 26 years, it will be critically important that new businesses continue to be formed (whether through entrepreneurship or relocation) and that existing ones grow.
In practice this means there is a need to:
1. Develop a flourishing micro-business environment
Given its character – and its demography – micro businesses will continue to be a big part of East Sussex’s growth narrative over the period to 2050. This needs to be celebrated. Micro businesses can be consistent with new models of living and working, providing levels of freedom and flexibility that are valued by many. Some micro businesses are also very innovative, and the transformational trends identified earlier – especially the expanded scope for flexible and remote working – offer a more diverse range of opportunities.
However, there may be challenges too. In the main, micro-businesses are less well resourced than larger firms and they may struggle to invest in their staff (if indeed they have any). Immediate pressures can limit capacity to look to the longer-term and to take advantage of new markets. They can also be quite lonely, particularly when they are also home based; for many people, the social aspects of work are very important in relation to overall well-being. For both reasons, micro-businesses may not always work well in relation to the younger workers that East Sussex needs to retain.
In order to harness the strengths of micro businesses whilst mitigating some of the associated risks, it will be essential that the wider micro business environment is a flourishing one. Micro business owners (and their staff) should genuinely feel that they are part of something bigger, and that they are recognised and valued as a core part of the journey to 2050.
Many micro business owners simply enjoy what they do, particularly given the freedoms and flexibilities it can bring. Others, however, will have ambitions to scale up, grow and expand into other areas of activity.
Evidence box
- Digital Eastbourne
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Digitalisation is transforming the economy everywhere, but in Eastbourne there is a growing concentration of businesses at the forefront of creative, digital and technology innovation. These include the established software and AI company Switchplane, smaller development firms such as Random Creation House, and a wide range of digital media businesses.
Chalk Eastbourne, the business-led collective for the sector, estimates that there are around 2,300 creative, digital and technology businesses in the town, attracted by East Sussex’s cultural and quality of life attractions.
Retaining and growing the sector will be supported by increasing collaboration and knowledge sharing and by developing the local talent pool.
2. Enable firms with ambition to scale up
For East Sussex as a whole, it is important that those businesses – of whatever size – with growth potential and ambition are appropriately equipped and supported. Locally there already exists expertise in delivering scale up programmes as part of the business support ecosystem. In time, these businesses can become local ‘anchors’ – by training their staff, working with other businesses through supply chains, and contributing to local areas in many different ways. They can also potentially be innovators and disruptors, by pivoting within businesses – rather than through a constant churn in business stock. East Sussex needs to be a place where businesses with the capacity and inclination to grow are enabled rather than stifled in their ambitions.
In practice, growing a business is hard. There is a requirement for people with the right skills – even if those skills are difficult for employers to specify and anyway are constantly changing. Finding appropriate commercial sites and premises can also be a major issue. Securing business finance – of the right form and at the right time – is often a third critical factor and it can make the difference between success and failure.
3. Attract responsible and higher-value investment
East Sussex benefits from significant external interest – whether from in-moving retirees or from visitors to its outstanding landscapes and its cultural and creative amenities and attractions. In seeking to deliver the Economic Prosperity Strategy, there is a need to attract and capture appropriate forms of investment from both the private and public sectors. This will enable ambitious businesses to scale up and grow. It should also mean that those places in need of re-investment are able to secure the resources they need.
However, this investment needs to be ‘right’ for East Sussex. It needs to be attuned to the character of the county, working with the grain of its communities, places and businesses. Importantly, it needs also to be aligned with commitments to sustainable growth.
4. Build business resilience to climate change, technology transformation and changing workforce dynamics
Finally, amongst businesses of all sizes – and from all sectors – there will be a need to build resilience, given the profound uncertainties that are likely to characterise the period through to 2050. At this stage, no one can anticipate with certainty what this might mean. But ‘resilience’ is not about ‘certainty’; it is about having the wherewithal to adapt – whether to changing technologies, the changing climate, changing regulation and legislation, or changes in the nature and process of work.
Evidence box
- Growing the circular economy at Newhaven
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Newhaven has a distinctive place in East Sussex’s economy, shaped by its port and connections to Dieppe and by its important industrial base. The loss of some larger manufacturers has presented challenges for the town – but it has diversified and contains several major sites for expansion.
Newhaven Enterprise Zone seeks to deliver a new era for the town, focused on its potential in a lower carbon economy. This recognises the scope for energy generation and the re-use of materials from waste and industrial operations, with the Enterprise Zone seeking to develop a cluster of activity in the low carbon and environmental goods and services sector. This will become increasingly important in meeting East Sussex’s net zero commitments and is already driving demand for new skills and services.
Joining up a range of other regeneration opportunities in the town, Newhaven has also been designated as a ‘pathfinder’ for a more flexible approach to the use of Government funding.
Areas for intervention
Given the priorities set out above, there are various actions that need to be taken by partners within East Sussex. All of these constitute a long-term commitment consistent with a strategy that looks to 2050. However, within this, some shorter-term interventions should also be identified.
1: Ensuring a sustainable and appropriate land supply pipeline
Large parts of East Sussex are within designated landscapes. East Sussex also faces significant environmental challenges linked particularly to tidal and fluvial flooding and inundation. For all these reasons, developable land with appropriate transport links – whether for employment or housing or both – is in short supply.
The allocation of sites for employment or housing is a matter for local plan-making, and it is not, strictly, within the remit of the Economic Prosperity Strategy. However, with a horizon that stretches to 2050 – and hence beyond existing local plans – it is appropriate to acknowledge the criticality of development land. Already, businesses (both those from within the county and those looking to relocate to East Sussex) are struggling to secure sites that meet their needs while available premises are few in number and many perform poorly in environmental terms. Over the years ahead, the nature of demand for employment land will change, in the context of new industries and technologies, hybrid working and automation. It will be important that the evolving needs of businesses are recognised, and that a sustainable and appropriate land supply and transport access pipeline is in place.
In relation to premises, the high street will continue to change as town centres evolve. Vacant retail units may need to be diverted to other commercial (or residential) uses, and steps should be taken to ensure that town centres in East Sussex are hubs for business life (noting particularly their appropriateness for many micro business activities).
At the same time, consideration will need to be given to affordable ‘move on’ space. This is frequently far more difficult to secure. Similarly, there will be a need for at least some larger sites that could reasonably be promoted to investors, particularly those in high value-added sectors like advanced engineering.
Throughout, there will need to be a recognition that appropriate sites and premises – which achieve good environmental standards and are linked with sustainable transport infrastructure – will be a core part of the economic prosperity narrative. Without them, East Sussex is very unlikely to flourish.
Evidence box
- Commercial land in East Sussex
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Room to Grow 2 was commissioned by East Sussex County Council in June 2021. It examined the supply of commercial premises in East Sussex.
It concluded that there are very low industrial vacancy rates and therefore very limited options for companies looking either to expand or to move into the area. It noted that demand is particularly high for warehousing and logistics uses, but it is also strong in relation to industrial and manufacturing uses. Some new sites have come forward (often with some public support), but in general it noted that the development process is ‘too slow’. In addition, there are challenges linked to the environmental performance of many industrial and manufacturing premises within the county. Given constraints on available land in many parts of the county, renewal of existing estates will be important, both for their environmental resilience and to ensure they continue to provide an attractive product for the market.
The report commented on the loss of office space, including through Permitted Development Rights. It also noted that demand for office space was subdued, and rental levels were low. However, it noted that demand for flexible workspace would probably increase following the pandemic.
Two of its conclusions are likely to be especially important looking ahead: external grant funding has been and will continue to be vital to encourage development due to viability issues; and the shortage of development sites will translate into a shortage of available stock ‘which may force companies to consider relocating outside of the area’.
2: Developing business networks
In seeking to deliver the Vision associated with the Economic Prosperity Strategy, the challenges of economic fragmentation across East Sussex should also be addressed. There is a need to achieve something closer to critical mass. The gains could be substantial: local multipliers ought to be apparent as the scope for local supply chains grows, and a more networked business community is also likely to be a far more innovative one.
Effective networking may be animated on a sectoral basis. It may also be developed in particular places. Generally speaking, networking tends to be most effective when these two dimensions come together. Throughout, business networks need to be business led and innovation focused. Identifying current – and potential future – business champions and ‘anchor’ institutions will also be important.
There are several well-established business networks operating at local and county-wide level, and a focus on industry-led collaboration and innovation would do much to accelerate the delivery of the overall Economic Prosperity Strategy Vision. It would help to articulate business needs in relation to skills and workforce development, and it could also help to manage investment risk.
3: Providing targeted support for innovation and growth
A third key Intervention Area relates to the need for targeted support to business and other organisations in respect of innovation, growth, business investment in the workforce, engagement in international trade and support for the development of the management and leadership skills that will be needed in growing businesses and adapting to changing technologies and opportunities. Within the context of the visions and the transformational trends highlighted earlier, support for decarbonisation and the exploitation of lower carbon goods and services will be especially important.
Programmes of support have been (and are) available, but in large part, uptake has been very slow. In part this is a corollary of fragmentation within the business base and the fact that East Sussex does not have a natural economic centre. The pace of change will be relentless over the next 26 years and many businesses will need support if they are to navigate it effectively. Persuading them to engage – whether (currently) through national schemes like Made Smarter or through locally-developed responses – will therefore be extremely important.
Evidence box
- Manufacturing in Wealden
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Wealden is home to the highest number of manufacturing businesses in East Sussex, with key and varied clusters in the Polegate/Hailsham area, Uckfield, and Crowborough.
These businesses are essential to the local economy, employing large numbers of people and participating in international supply chains and markets. These companies include Britannia Superfine, a confectionery manufacturer in Polegate; TR Fastenings, which manufactures and distributes engineering fastenings from Uckfield; and Servomex Group Limited in Crowborough, which designs, manufactures, and distributes industrial instruments for gas analysis.
The presence of these diverse manufacturing businesses highlights how the rural districts of East Sussex play a significant role in the broader economic landscape. Supporting their growth will be important for sustaining this sector's contribution to the local economy.