Industrial Strategy lacks the teeth to benefit the West Midlands
A new report has cast doubt on whether the Government’s new industrial strategy can tackle the current prosperity gap that exists between different regions in the UK.
The UK Powerhouse report by Irwin Mitchell and the Centre for Business & Economic research provides an estimate of GVA and job creation within 38 of the UK’s largest cities 12 months ahead of the Government’s official figures.
It reveals that Birmingham’s economy finished last year 2.4% larger than it was at the same time in 2015.
The report said the value of the goods and services produced in the city stood at £24.4bn in the 12 months to Q4 2016 and over the course of the year, employment levels rose by 1.6% to take total headcount to 547,846.
Coventry’s economy grew at the same rate as Birmingham’s during the period with employment levels going up by 1.3% to 177,902.
Wolverhampton moved up two places in the league table since the previous quarter although its output growth stood at 2%. Employment growth stood at 0.9% with employment levels standing at 114,700.
Highlighting the reasons for the increase in GVA in Birmingham, the report said that a positive end to 2016 for retailers, demonstrated by a year-on-year sales volume increase of 5.6%, put the wind in the sails of national shopping hotspots such as Birmingham.
The region as a whole also benefitted from the car manufacturing sector which went from strength-to-strength.
The report paints a positive picture for the short term and says Jaguar’s decision to use the West Midlands as the production base of it new electric car is likely to give the region’s cities a boost.
It also highlights the 1,000 jobs that will follow London Taxi Company’s opening of its new plant at Ansty Park.
Looking further ahead, the report also analysed the impact of the Government’s recently launched industrial strategy on UK cities.
The report says the Government’s aim to build on the success in the aerospace industry could and should benefit the West Midlands and points to the strong sector cluster in the Midlands.
The study’s authors highlight the benefits of the money that is being set aside for investment in improving transport, including the £20m set aside for the Midlands to address road pinch points.
Overall however the report suggests that the Government needs to do more to encourage balanced economies and forecasts that for the next 10 years, cities within the Midlands Engine continue to be outpaced by those with greater balance such as Milton Keynes, Oxford and Cambridge.
The report predicts that over the next decade the gap between London and the Midlands Engine region is set to increase by £46.6bn.
Chris Rawstron, partner and Head of Business Legal Services at Irwin Mitchell in Birmingham, said: “Looking at our 10 year forecasts of GVA, the best performing cities are still set to still be those within the current high growth regions of London, South East and East. The current rounds of government investments in initiatives such as the Midlands Engine will certainly boost these regions, but these investments as they stand are not likely to narrow the gap.
“The Midlands is receiving investment, but so too are London and the South East, especially from abroad. The new industrial strategy does not rebalance this fact.
“The challenge for the new industrial strategy is how to emulate the successes of cities such as Milton Keynes where clusters and networking effects have driven growth. The government has been thin on detail as to how this will be done.”
He said both institutions and skills needed to be key areas of focus for the new strategy.
“There are promising signs from the Midlands Engine, but the announcements so far are more likely to be small local boosts than total game-changers,” he added.
