Isle of Wight hits stormy waters

By James Arnold
BBC News Online business reporter

Not your usual economic blackspot

For many people, the Isle of Wight conjures up images of sepia-tinged gentility: cream teas, yachting, Queen Victoria, or - for those of a literary bent - the poet Tennyson.

Sitting awkwardly alongside this cosy respectability, however, is the increasing desperation of the island's economic predicament.

Shorn of its traditional maritime industries, with a slumbering tourism sector and almost no state assistance, the Isle of Wight is one of the poorest places in England.

Now, the local authorities are mulling a package of new initiatives to give its moribund economy a kick in the pants.

Can they succeed?

Liverpool-on-Solent

The island is mired in "picturesque poverty", says Councillor Harry Rees, who holds the portfolio for economic development on the island.

There's only the Solent between us and the mainland, but it may as well be an ocean Councillor Harry Rees

Annual economic output per head is just £8,300, two-thirds of the national average and roughly on a par with Merseyside.

The Hampshire mainland, by contrast, has GDP per head of almost £14,000, among the highest in the country.

Average earnings on the island are around £100 per week lower than the mainland - and official wage figures may not reflect the preponderance of unreliable part-time and seasonal work.

Officially, some 3,000 of the island's 56,000 workforce are out of work; strip out the effects of government schemes and other make-work projects, and the real figure could be more like 14,000.

Grey politics

Underpinning this dismal picture is the island's elderly population - almost one in three adults is retired, one of the highest rates in the country.

The retired are not all poor, but they are politically unadventurous - which can lead to conflict.

"It is impossible for fulfil everyone's needs at the same time," says Shirley Smart, leader of the Isle of Wight Council

People want better services, but simply aren't ready to pay for them."

And while the elderly demand a disproportionate share of state services, the government is progressively moving many crucial functions off the island.

Police control, value-added tax and many training services have already been moved back to the mainland; islanders are currently battling to prevent the axeing of a substantial chunk of local healthcare provision.

Action stations

To their credit, the local authorities are not standing idle.

The Southeast England Economic Development Agency, so far more accustomed to managing the problems of affluence than the perils of poverty, has launched a new action plan that aims to bring the island back into line with its wealthy neighbours.

• 

  Queen Victoria's a fan
  The humdrum port of Cowes, home to a famous regatta and the gateway to the island for many visitors, is being redeveloped over the next five years.
• Money - or at least attention - is being focused on research and development, in an effort to make the island more attractive to hi-tech businesses.
• Policy makers are taking a hard look at squeezing more value from tourism, most of which is pitifully small-scale at present.
• An even harder look will be directed at the island's infrastructure, much of which was built during its Victorian heyday.

Competitive disadvantages

Whether any of this will be sufficient to bring in investment is far from certain.

The infrastructure problem, for example, is a tough nut to crack.

When you compare it with Poland or the Far East, it becomes very difficult to justify remaining here Julian Brown, NEG Micon

The island has the highest car density in the country, leaving its narrow roads hopelessly choked with traffic even well outside the tourist season.

Ferry services from the mainland are reliable and efficient, but unsubsidised and far from cheap; Brian Bailey, who runs a coachbuilding firm in Cowes, reckons ferrying adds 12-15% to his cost of doing business.

Plans to build a fixed link to the mainland - either a bridge or a tunnel - are frequently discussed, but no one can make the sums add up.

"There's only the Solent between us and the mainland," says Harry Rees. "But it may as well be an ocean."

Lukewarm welcome

Toughest of all, the local authorities cannot lay out the red carpet for investors.

A lukewarm welcome awaits investors

More than two-thirds of the island are under some form of environmental protection, making planning a nightmare.

Combined with the natural conservatism of many residents, this has scared off some big names, reportedly including Disney, which wanted to build a theme park on the island.

And with the council lurching from one fiscal crunch to another, the supply of money for incentives has dried up.

Two years ago, NEG Micon, a large Danish manufacturer of wind turbines, was lured to the island with some £2.5m in state aid.

Now, says Mr Rees, "all I can offer is a maximum of £75,000 - and that comes with restrictions."

We love it here, but...

Julian Brown, managing director of NEG Micon, cannot praise the island too highly, but admits that the firm would probably never have moved there without aid.

Now, he says, he would love to expand his Newport plant, but the lack of further aid may force him to look overseas.

"We are very happy here," he says.

"But when you compare it with Poland, say, or the Far East, it becomes very difficult to justify remaining here on these terms."

Rich man, poor man

Frustratingly, many of these problems could be swept away with a stroke of a bureaucrat's pen.

The Isle of Wight is the only island in the European Union - outside the Danish archipelago - not to qualify for Category 1 regional aid.

This has cost the island some £250m during the current 2000-06 Category 1 funding programme, the council calculates.

At just over two-thirds of the EU average, the Isle of Wight's GDP per head theoretically entitles it to assistance.

But while the island remains administratively contained within wealthy Hampshire, its poverty has gone unnoticed in Brussels.

The island's council has lobbied Westminster frenziedly for some sort of recognition of its island status - the sort of modest autonomy enjoyed by Scotland's Western Isles, for example.

The island sought a judicial review of its status, without success, and complained successfully to the European ombudsman, but without changing policy in London.

The final countdown

In the meantime, its financial crisis is deepening.

Although it has won a £1m rebate in the government's latest tax formula, the mere fact of separation by sea leaves the council budget £4.2m in the red before a penny has been spent, Mr Rees calculates.

To meet the council's latest aspirations would demand a council-tax hike of 25% - political suicide in a constituency where money is tight.

The logical consequence of all this, says Mr Rees, is for the council to take Westminster to the European Court of Human Rights.

"For us, it's Custer's last stand," he says.

But look what happened to Custer.