Autumn Statement: Does the West Midlands benefit?

CHANCELLOR George Osborne’s Autumn Statement presented little of any promise for the West Midlands and business leaders in the region have been left to take comfort where they can.

The Chancellor yesterday highlighted a package of measures which he said would help to stimulate economic recovery.

Coverage of the Autumn Statement is brought to readers of TheBusinessDesk.com in partnership with Ernst & Young.

Details were outlined on the Treasury website but for the West Midlands there was little that was new, with many of the measures announced elsewhere.

Listed were two major projects being conducted with the universities – the £60m research partnership between the University of Birmingham and Rolls-Royce (of which the Government is contributing £20m) and the £92m National Automotive Innovation Campus at the University of Warwick; a joint venture between the Government and manufacturers Jaguar Land Rover and its parent, Tata. Both of these schemes had been announced at the time of the Conservative Party Conference, which took place in Birmingham in October.

What has been pledged is £10m to reduce congestion at Junction 12 of the M40; a decision welcomed by business leaders in Coventry and Warwickshire as has, the plan to include Coventry in the second wave of super-connected cities.

Louise Bennett, chief executive of the Coventry & Warwickshire Chamber of Commerce, said: “For Coventry specifically, the new ultra-fast broadband connection is very welcome.

“In the modern world, any city that wants to compete on a global scale has to have the very latest in digital technology so it was very good news to hear Coventry will benefit from this.”

The Treasury site also claims business support measures – although it does not say what they are – will benefit 368,000 SMEs in the region.

The decision to reduce Corporation Tax by 1% to 21% from April 2014 was welcomed by   Steve Brittan, new president of Birmingham Chamber of Commerce Group, because it would send a strong message overseas that the UK was open for business.

He added: “For manufacturers the announcement that the small companies tax rate of 20% will be maintained for another two years and plant and machinery capital allowance will be increased to £250,000 is welcome and should incentivise business to invest.

“The cancellation of the planned increase in fuel tax in January will benefit all elements of business and will help to keep inflation down.”

He also said the 25% increase in funding for UK Trade and Investment was a huge boost for Birmingham exporters.

“A third of businesses in the city export already but the potential could increase that by another third. We need to focus this extra resource on encouraging new exporters, moving beyond Europe to the Far East and BRIC countries,” he added.

Elsewhere on the chamber’s patch, he said the announcement that the A5 would be linked to the M1 was a huge fillip for Southern Staffordshire businesses.

Paul Fleetham, managing director of National Contracting and Middle East for Wolverhampton-based Tarmac, said it was pleasing to see highways infrastructure taking prominence on the political agenda.

“But the Government must now use this momentum to set out a clear and long-term vision for both the strategic and local road network,” he said.  
 
“While the Chancellor’s commitment to new road projects and additional funding for maintenance is welcome, it will not provide the adequate levels of funding to maintain our deteriorating road asset.
 
“It also remains unclear how much of the £333m maintenance funding that councils will receive for the local network.”

He said many local authorities were now operating with highways maintenance budgets which were 25% below what they were four years ago, with the national annual maintenance shortfall now standing at £800m.
 
“We appreciate that the Government faces tough spending decisions, but the public purse must provide more funding to help maintain our under-funded asset. The current reality is that revenues from fuel duty and road tax continue to exceed expenditure on roads by £30bn per annum.”   
 
John Rider, West Midlands’ chairman of the Institute of Directors, said the focus on infrastructure was welcome.

“I have long called for spending to be more focussed towards building projects which generate significant benefits for the economy, get the construction industry moving and create jobs.

“The Government does not have to look hard to find West Midlands projects in need of funding; indeed there are transport schemes across the region which could get underway quickly. Now we need to get on with it.”

Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, added: “I am pleased that the Government is extending infrastructure spending – it is desperately needed.

“As is the help for SMEs – they have struggled to invest in the continuing difficult economic climate. The Chancellor’s incentives reflect a major boost for the sector.”