The State of Britain

EM

Mickleover in Derby the wealthiest area in England but Highfield North in Leicester the poorest, all of the region’s LEPs see productivity growth

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London, with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

Four other areas of the region also made the wealthiest top ten; Allestree in Derby, Lady Bay in Nottingham and parts of South Northamptonshire.

Like most regions of the UK, output per hour in the EM is below the UK average. Productivity per hour in the region was 13.5% below the UK average which ranked the region eighth nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into EM’s performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

All of the region’s LEPs recorded productivity below the UK average. The best was SEMLEP ranked 13th at 4% below, the rest all performed poorly and ranged from 10% to 18% below the UK average. Leicestershire LEP, Derbyshire and Nottinghamshire LEP and Greater Lincolnshire LEP were ranked 24th, 28th and 36th.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The EM’s results for productivity growth were better. With growth of 7% SEMLEP was ranked 6th in the UK. Greater Lincolnshire LEP was ranked 18th nationally with growth of 3% just beating Derbyshire and Nottinghamshire LEP. Leicestershire LEP was ranked 29th with 1% growth which meant none of the region’s LEPs recorded productivity levels lower in 2018 than 2010.

Despite this, all of the EM’s three subregions recorded productivity below the UK average. Leicestershire, Rutland and Northamptonshire -12%, Derbyshire and Nottinghamshire -14% and Lincolnshire -18%.

At a county level, with the exception of South Nottinghamshire (+0.2%) all of the EM’s economic regions recorded productivity below the UK average. North Northamptonshire had the lowest productivity, 24% below the UK average.

The growth in hours worked between 2010 and 2018 in Leicestershire, Rutland and Northamptonshire was 11%, beating Derbyshire and Nottinghamshire which recorded 9%. In UK terms this level of growth was in the top half of the country’s 40 subregions. Lincolnshire grew 5% which ranked 38th.

If the increase in economic output is also factored in then the sub regional performances are also good, mirroring the region’s LEPs. Lincolnshire was ranked 8th in the UK with growth of 8%, Leicestershire, Rutland and Northamptonshire was placed 15th with 4% and Derbyshire and Nottinghamshire 17th with 3%. 

More data from the ONS showed unemployment in the region was 8,000 higher at 98,000 between November and January; the uplift of 0.3% took the overall rate to 3.9%. Northern Ireland had the lowest rate of 2.4%, the North East the highest with 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 78% in the EM where 2.4m are employed; the UK rate was 76.5%.

The EM’s average property price decreased by 0.4% to £195,707, which took the annual increase to 2.3%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

EM’s economic growth volatile, depending on the period the region ranked second or last, productivity growth the second best in the UK and a big drop in unemployment

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that EM’s growth has dropped from 0.7% to 0.1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the EM last (previous ranking eleventh) and suggests the region has worsened relative to the other eleven parts of the UK. Over the same period UK growth was 1.4% and growth in London (ranked first) was 3.3%.

The latest official ONS figures for an earlier period are better. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the EM, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the EM economy grew by 1.8%, down from 2% growth the previous quarter. This placed the EM second (previous ranking fifth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ (including the WM) in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to June 2019 was also better for the region than the previous quarter. The EM economy grew by 0.6% in April to June 2019, following growth of 0.1% in January to March 2019.

This placed the EM third (previous ranking ninth) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, regional sectors, electricity/gas/steam/air conditioning supply and manufacturing grew by 8.0% and 1.0%. Also finance and wholesale/retail trade grew by 9.4% and 1.9% but EM’s professional scientific and technical activities fell by 3.7%.

In general all sectors in the region grew, with production, services, construction and agriculture expanding by 1.6%, 0.3%, 0.2% and 0.1% respectively. Construction has been the best performer relative to 2017 with agriculture, production and services moderately flat since Quarter 3 (July to Sept) 2018 although production saw an uplift in Quarter 2 2019.

Productivity

Like most regions of the UK, output per hour in the EM was below the UK average. Productivity in the EM was 13.5% under the norm which ranked the region eighth in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The EM moved down the rankings slightly to ninth in terms of output per job. This means that on average workers in the EM worked shorter hours for each job compared with the UK average. The region’s 14.5% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The EM was ranked second as output per hour grew by 2.1%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

In terms of sectors, productivity in arts/entertainment/recreation was better than expected but finance and insurance disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region decreased by 21,000 to 89,000 between October and December; the big drop of 0.9% took the rate to 3.6%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.1% which compared with 78.4% in the EM, where 2.5m are employed; the UK rate was 76.5%.

In December, average earnings in the EM fell by £3 to £580 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The EM was ranked eighth (previous ranking also eighth).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The EM’s average property price increased by 0.5% over the month to £197,048, the uplift took the annual increase to 2.8%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

The gap between the EM’s tax take and public spending shrinks, the region sees the biggest drop in unemployment in Britain and £3m is spent on finding a missing £10m loan

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the EM had a deficit of £6.3bn, a smaller shortfall than the £7.5bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the EM’s deficit was £1,303, lower than the £1,578 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; all the other regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the EM was £56.6bn or £11,784 per head, an increase on the 2018 figure of £55.7bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The EM collected £50.8bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the EM fell by 16,000 to 95,000 between September and November 2019; the decrease of 0.6%, the biggest drop in Britain, took the overall rate to 3.9%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West had the highest employment rate at 79.8% which compared with 77.2% in the EM. UK employment was estimated at 76.3%.

EM’s average property prices increased by 1.1% during November 2019, the uplift to £197,792, increased annual growth to 2.5%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

Regional governance was again in the spotlight this month after it emerged a law company set up by Northamptonshire county council and two other local authorities has recorded a £1.2m loss. The firm, LGSS Law, is owned by the three councils and offers public sector legal services. A £1m overdraft offered by Northamptonshire County Council has been largely drawn down as has £375,000 of a Cambridgeshire Council overdraft.

Northamptonshire County Council suffered its own cash flow problems in 2018 which led to a scheme to abolish it and seven other district and borough councils. The mismanagement led to roads not being gritted, libraries being taken over by the community and the government giving the council permission to raise council tax by 5%.

The estimated cost of setting up the new authorities is £44m but annual savings of £85m could be achieved. Existing councils will be scrapped and replaced by two unitary authorities, West and North Northamptonshire, under which will sit Northampton Town Council, England’s largest town council.

One of the scrapped councils will be Northampton Borough Council, whose £10.25m loan to Northampton Town Football Club in 2013/2014 to redevelop Sixfields stadium, is still being investigated by the police. The council has already apologised following a report by PwC in 2016 which said the loan was rushed through without sufficient checks.

So far more than £3m has been spent on an inquiry into the missing money. The council has paid out £2.3m and Northamptonshire Police has spent £974,000 investigating allegations including theft and fraud. Most of the council’s spend has gone on external lawyers and accountants.

On HS2, the Department for Transport and HS2 Ltd did not allow for all uncertainties when estimating initial costs, the National Audit Office (NAO) has said. In 2015, HS2 was due to cost £56bn but a leaked government report suggests the total could reach £106bn. At this cost the decision whether to proceed or not will be taken at Prime Ministerial level next month.

Leicestershire based Norton Motorcycles has gone into administration. The iconic British motorcycle brand was struggling to pay a tax bill and faced a winding-up order; 100 jobs at its Castle Donington factory are at risk.

The East Midlands posts average 2018 growth, Derby has the third fastest growing local economy in the UK but South and West Derbyshire underperforms, a big drop in EM’s unemployment

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the EM economy grew by 1.1% in 2018, down from the 2017 growth rate of 1.6%. This placed EM seventh (2017 ranking eighth) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

London topped the 2018 table with growth of 2.0% whilst Northern Ireland was at the bottom.

Within the region, the Derby economy grew the fastest at 6.9%, followed by North Nottinghamshire at 2.7% and South Nottinghamshire at 2.5%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%, Derby was third.

Two areas of the region saw their GDP decline in 2018. The worst performer was South and West Derbyshire at -5.1% followed by Nottingham at -0.6%. In UK terms, the lowest annual growth of sub national areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 6.8% to £30,610 was seen in Derby but Nottingham was still top in the region at £34,472. GDP per head fell by 5.7% in South and West Derbyshire to £21,480 but despite growing by 2.2%, North Nottinghamshire posted the lowest GDP per head in the region at £21,284.

In terms of UK extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the EM economy were information/communication at 10% and arts/entertainment and transport both at 4%. Those areas that did not perform well were mining which dropped by 3%, agriculture down by 2% and public administration/defence fell by 1%. Overall the services sector grew by 1.8% and construction by 0.5% but production fell by 1.2%.

The 2018 performance of the region’s enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, South East Midlands (Northamptonshire) was ranked 8th in the UK (2017 ranking 30th) with growth of 2.1%, with Leicestershire moving up the rankings from 32nd to 16th with growth of 1.7% and Derby, Derbyshire, Nottingham, Nottinghamshire moving up five places to 29th. With -0.3% growth, the region’s other LEP, Greater Lincolnshire, fell from 15th to 37th.

More data from the ONS showed unemployment in the EM fell by a whopping 25,000 to 90,000 between August and October 2019; the decrease of 1.0% was the best in the UK and took the overall rate to 3.7%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 77.3% in the EM. UK employment was estimated at 76.2%.

EM average property prices fell by 0.7% during October 2019 to £194,134, which took annual growth to 1.3%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

ONS and ESCoe regional growth figures suggest the EM plummets down the UK rankings over nine months, the economy contracts in Q1, but a good increase in regional pay

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The mechanism by which councils will have the opportunity to bid for funding of up to £25m as part of the government’s £3.6bn Towns Fund  has been unveiled by Midlands Minister, Robert Jenrick. The Towns Fund prospectus provides information to councils in 100 places chosen to pioneer Town Deals and councils will receive a share of £16.4m funding to shape up their plans.

The funding could be used to redevelop vacant buildings and land, support small businesses, boost transport links and increase access to high-speed broadband.

Lead councils in each place will now bring together a Town Deal Board, including representatives from across the public, private and voluntary sectors, to develop bespoke Town Investment Plans by summer 2020.

Thirty towns are in the Midlands Engine area. EM towns include Corby, Mansfield Northampton, and Staveley amongst others.

The region did well on infrastructure investment this month.  Of the £255m Housing Infrastructure Fund spend announced by the Chancellor, £43m was earmarked for the EM.

A bid from Rutland County Council to deliver a new school and infrastructure at St George’s Barracks, North Luffenham, secured £29m. Also Leicestershire County Council was awarded £15m for the Melton Mowbray Southern Distributor Road.

Legislation to create two unitary authorities in Northamptonshire to replace the troubled county council and the district and borough councils has been parked.

The government had already approved the plan, and Parliament was expected to pass it before the election, but it was put on hold after Labour called for a third unitary council in the county, to serve Northampton only.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the East Midlands, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest available figures showed the EM’s economy annually grew by 2.0%, down from 3.4% growth the previous quarter. This placed the EM fifth (previous ranking first) out of the twelve UK ‘regions.’

London topped the table with growth of 4.2%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also showed that the region’s economy was one of three in the UK to contract in the quarter to March 2019, the others were Y&H and Wales. The EM economy declined by 0.2% in January to March 2019, following growth of 0.3% in October to December 2018.

In this period, the education industry grew by 5.6% and made the largest positive contribution to growth whereas administrative and support service activities fell by 6.9% and made the largest negative contribution.

Overall, the services sector was the only positive contributor to GDP, while agriculture and production went into reverse and construction made no contribution either way.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the EM eleventh (previous rank ninth) with growth of 0.7%, which suggests the region has had a poor summer relative to other parts of the UK and has slipped from first to eleventh in nine months.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32%, which compared with the South West of England (bottom) at 0.41%

More data from the ONS showed unemployment in the region increased by 6,000 to 101,000 between July and September; the uplift of 0.2% took the overall rate to 4.5%. Northern Ireland had the lowest rate at 2.5% with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 76.7% in the region. UK employment was estimated at 76.0%.

In September, average earnings in the EM were up by £30 to £584 per week, the second highest uplift in the UK. London had the highest average earnings of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

EM’s average property prices fell by 1.2% over the month to £194,219, which took annual growth to a meagre 0.1%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

The first new development corporation at Toton and the governance of Northamptonshire councils in the spotlight again

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Unemployment in the EM increased by 7,000 to 111,000 between June and August, which took the overall rate to 4.5%.

The South West continued to record the lowest unemployment rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East.

The South West also had the highest employment rate at 81.0% which compared with 76.6% in the EM. UK employment was estimated at 75.9%.

EM’s average property prices increased by 1.8% to £197,682, which took annual growth to 2.6%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

The ONS’s Personal Well-being (or Happiness) Index has ranked the EM fifth out of the 12 UK ‘regions’ in terms of an improvement in life satisfaction since the last survey. The Northern Irish were the happiest folk in the UK with Londoners the most miserable.

Development

Robert Jenrick, the Minister for the Midlands, has announced £10m of funding targeted at new development corporations which will enable councils to progress proposals to deliver more new towns and economic growth opportunities on the scale of Canary Wharf or Milton Keynes,

The first project, a new Development Corporation at Toton, will be led by the Midlands Engine chairman, Sir John Peace. Toton is located close to the M1, East Midlands Airport and the proposed HS2 rail hub.

Historically development corporations have helped established over 20 new towns including Milton Keynes and Telford, as well as delivering urban regeneration projects such as Canary Wharf.

Many of the laws needed to set up and run development corporations date from the early 1980s and a review is being undertaken to see whether they need to be updated.

Flooding affected economic development across the East Midlands as heavy rains hit the region.

As well as drivers stuck in floodwaters, events including the Matlock Bath Illuminations had to be called off. Last year Derbyshire Dales District Council spent £163K staging the event but this investment was more than recouped by c60K paying visitors.

A new £20m museum dedicated to motorsport has opened in Northamptonshire. The Silverstone Experience is housed in a World War Two hangar on the former aerodrome site and is expected to attract about 500,000 visitors a year.

The private sector funds for the project were more than matched by a £3m loan from South Northamptonshire Council and a £9.1m grant from the Heritage Lottery Fund.

Regional governance was again in the spotlight this month. A public interest report, undertaken by KPMG at a cost of c£100K, will investigate how Northamptonshire County Council collapsed after an overspend by £35m of its £416m 2017/18 budget.

Public interest reports are part of the Audit Commission Act 1998 and are issued when auditors believe they should highlight significant matters to the public.

The mismanagement led to roads not being gritted, libraries being taken over by the community and the government giving the council permission to raise council tax by 5%. The county council will cease to exist from spring 2021 with two new unitary authorities planned to replace the county and district councils at a cost of £60m.

Meanwhile, Northampton Borough Council’s £10.25m loan to Northampton Town in 2013/2014 to redevelop Sixfields stadium is being investigated by the police. The council has already apologised following a report by PwC in 2016 which said the loan was rushed through without sufficient checks.

Regional landmark, Cottam coal-fired power station, was turned off this month. Commissioned in 1968, the plant originally had an anticipated operational life of 30 years and was capable of generating enough electricity for 3.7m homes.

Work to decommission the power station has begun and is likely to involve levelling the buildings. The closure leaves six major coal-fired stations working in the UK.

Transport

CBI East Midlands, West Midlands, Yorkshire and Humber, London, the North East and North West regional directors have urged the government to build the HS2 rail project in full.

However, a paper by the Adam Smith Institute, also released this month, claims that HS2 will deliver limited benefits and that some Northern cities could lose direct trains to London.

It recommends instead, upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, building new sections of railway and targeting bottlenecks at key junctions.

Phase 2 of the project, (Birmingham to York via the East Midlands) is due to open at the end of 2033. Once the new Phase 1 line from Birmingham is completed, the line will head northeast and form the proposed East Midlands Hub located at Toton, which will serve Derby, Leicester and Nottingham.

The line would then connect with the northbound East Coast Mainline south of York. A parallel spur to the northbound HS2 track will use the Midland Main Line before rejoining the HS2 track east of Grimethorpe. Chesterfield and Sheffield will be served by HS2 classic compatible trains on this spur.

On the buses, Yourbus, which served routes in Derbyshire and Nottinghamshire, has ceased trading.

A refreshed Midland’s Engine strategy promised by the autumn and new regional GDP figures from the ONS ranks the East Midlands first

Reading Time: 4 minutesThe Ministry of Housing, Communities and Local Government has published its deprivation index which looks at an area’s levels of income, employment, education, health and crime as well as housing services and living environment. Jaywick in Essex, near Clacton-on-Sea, was previously found to be the most deprived in the last two reports in 2010 and 2015 and it has won this unwelcome accolade again. Jaywick is followed by nine areas of the North West as the most deprived in England, part of Gainsborough is the first EM entry ranked 24th. The Ministry divides England up into 32,844 neighbourhoods averaging about 1,500 residents or 650 households each.

In terms of local authorities, 31% of Nottingham was classified as deprived which ranked the city 15th worst in the UK but no other EM local authority made the top 32. In terms of performance since 2015, one area of the EM has seen deprivation accelerate the fastest in the UK. Mansfield was ranked fourth and saw deprivation increase by c6%.

Mansfield is one of the EM towns invited to apply for regeneration funding as part of the £3.6bn Towns Fund which is targeted at 100 English towns. Towns must submit economic growth plans with a focus on improved transport, broadband connectivity, skills and culture. The Midlands were also awarded £21.1m as part of a £95m pot to revive historic high streets, with Leicester, Newark and Grantham some of the half dozen or so EM towns that will benefit.

During a tour of Bombardier in Derby, Midlands Minister Robert Jenrick, announced the government’s commitment to further devolution deals across the region. He also undertook to deliver a new Midlands Engine Strategy this autumn which will be written in partnership with the region.

Transport
Construction work continues while the HS2 review is ongoing but if HS2 does goes ahead, the first phase between London and Birmingham will be delayed by up to five years, Transport Secretary, Grant Shapps, has confirmed. That section of the line was due to open at the end of 2026, but it could now be between 2028 and 2031 before the first trains run on the route. Undeterred, regional transport body Midlands Connect, has submitted proposals to the Department for Transport (DfT) for a 33-minute service between Birmingham and Nottingham and a 90-minute connection from Leeds and Bedford via Leicester. Trains between Birmingham and Nottingham currently take c70 minutes, whilst Leeds and Leicester takes two hours plus. The DfT said an independent review will consider Midlands Connect’s submission; HS2’s total cost has risen from £62bn to between £81bn and £88bn.

In the air, services from the East Midlands to Brussels have restarted after the route was lost when Flybmi went into administration. Loganair will operate the route six days a week after Burnaston-based Toyota offered assurances it would use it regularly. Loganair will also fly to and from Inverness.

Development
A Jaguar Land Rover distribution centre in Appleby Magna will go ahead on a 238-acre site at junction 11 of the M42. The new facility will service 80 countries, create 1,200 immediate jobs with 3,000 forecast by 2030. JLR said it would consolidate work of 10 sites, cut their vehicle movements, and improve efficiency. Work on the site could start in 2020 and be completed in 2023. When fully operational, developers say the project will contribute an additional £139m pa to the region.

Jobs
Car dealer Pendragon is to cut c300 jobs and close more than 20 showrooms. The firm confirmed it will shut nearly two thirds of the Car Store chain, with just 12 of its 34 branches surviving. The firm also trades under the Evans Halshaw and Stratstone brands and is one of Nottinghamshire’s largest companies.

A labelling error which resulted in a firm recalling several brands and flavours of popcorn because they may have contained milk, led to significant losses which has consequently led to its administration. Nottinghamshire-based Thomas Tucker supplied snacks and sweets to cinemas and supermarkets across the UK. The underlying cause was disputed but the company agreed a voluntary product recall following an investigation by the Food Standards Agency. The administrator hopes to sell the firm as a going concern but of the 116 headcount, 64 staff have so far lost their jobs.

The Stats
For the first time, the ONS has published quarterly GDP estimates for the East Midlands, the eight other English regions and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The latest available figures, which are for the year ended 2018, showed the EM economy grew by 3.4%. This ranked the EM top out of the twelve UK ‘regions.’ At the bottom of the league the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the professional, scientific and technical industry grew by 6.5% and made the largest positive contribution to growth but education fell by 7.9% and made the largest negative contribution. Each of the three main sectors (production, construction and services) all grew but construction was the main driver with production and services virtually at a standstill. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked the EM ninth with growth of 1.2%, which suggests the March ‘Brexit’ slowdown has hit the region harder relative to other parts of the UK.

More data from the ONS showed unemployment in the EM increased by 10,000 to 115,000 between May and July, the uplift of 0.3% took the overall rate to 4.6%. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 76.9% in the EM. UK employment was estimated at 76.1%.

EM average property prices increased by 0.3% to £194,798, which took annual growth to 1.9%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.

East Midland’s property prices increase the most in England but economic growth slows and a new ‘Minister for the Midlands’

Reading Time: 4 minutesGrowth in the East Midlands was 1.2% in the year to June 2019 according to estimates from ESCoE. The drop from the previous quarter’s growth of 1.8% ranked the East Midlands third worst overall (out of twelve UK ‘regions’) and suggests the region’s economy is contracting. At 2.3%, London had the best performance with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, falling growth in the East Midlands is similar to other regional economies which have also shrunk.

Unemployment in the East Midlands increased by 7,000 to 106,000 between April and June, an uplift of 0.3% to 4.3%. The South West had the lowest rate at 2.7%, the North East had the highest at 5.3% with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5% which compared with 76.9% in the East Midlands. UK employment was estimated at 76.1%, the joint highest since comparative records began in 1971.

In June, the East Midlands was one of only three regions to see a drop in average earnings; from £574 to £564 per week. London had the highest average earnings of £831; the North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.

The East Midland’s average property prices increased during the month, the 1.6% uplift to £195,344 took the annual growth rate to 3.3%; the best in England. In comparison UK prices grew by 0.7% to £230,292 during June, which left the annual growth rate unchanged at 0.9%.

The government has launched a review of the proposed high speed rail link (HS2) with a decision promised by the end of the year. With £7.4bn already spent, Transport Secretary, Grant Shapps, has refused to rule out scrapping it entirely. Phase 2 (Birmingham to York via the East Midlands) is due to open at the end of 2033. Once the new Phase 1 line from Birmingham is completed, the line will head northeast and form the proposed East Midlands Hub located at Toton, which will serve Derby, Leicester and Nottingham. The line then connects into the northbound East Coast Mainline south of York. A parallel spur to the northbound HS2 track will use the Midland Main Line before rejoining the HS2 track east of Grimethorpe. Chesterfield and Sheffield will be served by HS2 classic compatible trains on this spur. In July, the current chairman of the project warned that the total cost could rise by £30bn to £86bn, putting the projects value for money into question.

There may be less shale gas in the Bowland geological formation, which runs through large parts of the East Midlands, Lancashire, Yorkshire, and into North Wales, than previously thought. The University of Nottingham and the British Geological Survey (BGS) have developed a new method for analysing the gas content of shale, which queries a 1,300 trillion feet of gas estimate in a 2013, suggesting instead that there may only be 200 trillion feet; 5-7 years’ of gas at the current rate of consumption instead of 50 years. Experts at the BGS were cautious in their interpretation of the study, however, even though several of their own scientists were involved in the paper. Cuadrilla, also rejected the new paper and other academics suggested the only way to provide accurate estimates of how much gas is likely to be produced is to drill, hydraulically fracture and test many wells. Another energy firm, Ineos, has successfully appealed to the Planning Inspectorate to look for shale gas near Eckington, north of Chesterfield.

On regional transport, Abellio has taken over the running of the East Midlands railway after it was awarded an eight year franchise in May. The East Midlands line operates trains between Norwich, Nottingham and Liverpool. The Dutch state-owned firm already operates five other rail franchises and has promised £600m of investment, £400m of which will be spent on 33 five-carriage trains, which will include air conditioning, wi-fi and plug sockets for passengers. The former franchisee, Stagecoach, was disqualified from re-bidding after a row with the government over pension liabilities. Abellio, has promised to install an extra 80% of capacity on morning peak services into Nottingham, Lincoln and St Pancras.

A report by an All-Party Parliamentary Group (‘APPG’) of MPs which looks at Post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status. Existing less developed regions like Cornwall and West Wales & the Valleys, will be joined by Lincolnshire, as well as South Yorkshire and Tees Valley & Durham. These areas would likely have received at least €500 per head in EU regional development funding over 2021-27 which adds up to an extra £950m. Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75 and 100 per cent of the EU average, compared to 75-90 per cent at present.

Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head qualifying them for ‘transition region’ status. Leicestershire, Rutland & Northamptonshire fall within this category, as well as East Anglia, East Wales, Greater Manchester, Outer London South, North Yorkshire and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, or but €50 per head over the next EU spending round would equate to £560m.

The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Fund. Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula. How the Shared Prosperity Fund will be allocated and mesh with other pots like the City Deals is yet to be determined.

Newark MP, Robert Jenrick, is the new ‘Minister for the Midlands’. The Local Government Secretary says he will work to develop a refreshed Midlands Engine strategy. Jenrick’s job as Local Government Secretary makes him a Cabinet Minister, one rung up from Northern Powerhouse minister, Jake Berry, who is a Minster of State. To avoid the impression of favouritism, Berry is entitled to attend Cabinet.

The South East Midlands industrial strategy unveiled and a ‘Meteor’ on its way to Leicester

Reading Time: 3 minutesUnemployment in the East Midlands remained at 104,000 between March and May, a rate of 4.2%. At 2.6% the South West of England had the lowest rate and at 5.6% the North East had the highest rate in the country. The UK unemployment rate stands at 3.8%.

The East Midlands average property price decreased by 1.2% to £189,622 during the month which reduced annual growth rate to 0.4%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

The South East Midlands, which includes Northamptonshire, has become one of the first regions to agree a local industrial strategy with the government. The 111 page document was developed by the South East Midlands Local Enterprise Partnership in collaboration with local businesses and was signed off by Business Secretary, Greg Clark. The strategy builds on the existing research and development strengths of the area, including work on automotive design, connected and autonomous vehicles, and the future of freight transport.

A key focus of the plan is positioning The South East Midlands as the ‘Connected Core’ of the Oxford Cambridge arc. A plan from the National Infrastructure Commission which is intended to safeguard the booming economies of the UK’s science and technology hub. The Arc means the large scale development of homes, offices and roads across central England and the re-opening of the previously closed Oxford to Cambridge railway.

In its review this month of the 37 Local Enterprise Partnerships (LEPs) – the private sector-led partnerships between businesses and local public sector bodies that support local economic growth – the Public Accounts Committee of the House of Commons found that from 2015-16 to date; £9.1bn of taxpayers’ money has been awarded to LEPs through three tranches of Growth Deals. The north of England, with 11 LEPs, has received most of the funding at £3.4bn (38%), the East of England, with three LEPs, has received the least with £703m, and London, with one LEP, has received £435m.

The Ministry of Housing, Communities and Local Government considers the population of an area as well as the strength of the LEP’s strategic economic plans and projects when deciding Growth Deal allocations. There is no overlapping LEP areas in the East Midlands which means these LEPs will be able to bid for funds from the Government’s proposed Shared Prosperity Fund that will replace EU structural funding after Brexit. An overlap in the north of the region will disappear after Chesterfield withdraws from the Sheffield City Region (‘SCR’) LEP next year. The town is currently part of the SCR grouping and the Derby, Derbyshire, Nottingham & Nottinghamshire (D2N2) LEP.

The South East Midlands (including Northamptonshire) Local Enterprise Partnership has received £261m, the 13th highest in England since 2015, whereas Leicester and Leicestershire LEP has received £126m, the tenth lowest in England. Other East Midland’s LEPS awards have been D2N2 £257m and Greater Lincolnshire £155m. The Ministry does not to evaluate the Local Growth Fund which means it has no understanding of the impact that spending through LEPs has on local economic growth. The latest growth figures for the region from ESCoE showed growth at 1.6% which compared with the UK average of 1.5%.

Nearly £14m of funding from the UK Research Partnership Investment Fund (UKRPIF). has been approved for a space research centre in Leicester. The space park is a joint project between the Leicester and Leicestershire Enterprise Partnership LEP, the University of Leicester and Leicester City Council. The Manufacturing, Engineering, Technology and Earth Observation Research centre (METEOR) will be a part of Space Park Leicester – a facility due to open near the National Space Centre in 2020.

The 24 Enterprise Zones designated in England in 2011 to improve economic growth had created 17,307 jobs by 2017 instead of the forecast 54,000 jobs by 2015. BBC-commissioned research conducted by think tank charity Centre for Cities also found that in two areas the number of jobs had fallen. Enterprise zones offered cheaper business rates, superfast broadband and lower levels of planning control. According to the research 2,084 jobs were created in the Northampton Waterside Enterprise Zone, the fourth best performing zone in England, and 221 jobs in the Nottingham Enterprise Zone which was less successful.

The cost of the scheme is disputed, with The Ministry of Housing, Communities and Local Government claiming £101m, £215m less than the BBC’s estimate of £316m+. The Ministry also disputes the methodology used in the research. A further 24 Zones were created in 2016 and 2017.

On jobs, Müller’s Foston dairy in Derbyshire is likely to cease operations by the end of 2019 with processing absorbed by its other dairies. The firm said the closure was due to declining fresh milk sales and will mean the loss of 223 jobs.

Nottingham the poorest city in the UK and East Derbyshire’s households see their income shrink.

Reading Time: 3 minutesUnemployment in the East Midlands decreased by 8,000 to 105,000 between February and April, the drop of 0.4% to 4.3% was the best in Great Britain. At 2.7% and 5.7% the SW of England and the North East had the lowest and highest unemployment rates in the country. The UK unemployment rate stands at 3.8%.

East Midland’s average property prices increased by 0.9% to £192,682 during the month which uplifted the annual growth rate to 2.9%. In comparison, UK prices increased by 0.7% to £228,903 during April which held the annual growth rate at 1.4%.

Nottingham has been named the UK’s poorest city, narrowly beating Leicester by £115 per household according to the latest figures from the ONS. Nottingham has the UK’s lowest gross disposable household income (wages or benefits) of £12,445 a year after tax. Leicester – which won the dubious title in 2013 and 2014 – had gross disposable household income of £12,560 a year while in Derby the figure was £14,556. The UK average is £19,514 per household with some London boroughs like Kensington and Chelsea recording household income over £60,000, a growth rate of 4.9% from the previous year. At 1.7% East Derbyshire had the third highest decrease in household income. Whilst a large student population and the way local authority boundaries are drawn may depress the figures every year, a decline in household income of 0.3% in Nottingham and 1.5% in Leicester is more difficult to explain away. Last month a report by law firm Irwin Mitchell and the Centre for Economics and Business Research (CEBR), predicted that by 2020 Derby will have the lowest economic growth of any city in England (0.6%).

On the trains, Midlands Connect has submitted a proposal for £2bn of improvements to the rail network between the East and West Midlands. The plans would mean direct services between Coventry, Leicester and Nottingham for the first time since 2004. The upgrade would be completed in phases between 2024 and 2033. Midlands Connect was formed in 2014 and is a collaboration of 11 LEPs, Network Rail, Highways England, central government, 26 local authorities and the business community. It is the body behind long-term transport plans for the region. Rail use in the Midlands has risen by 37% over the past decade but rail capacity has not materially increased. The upgrades would create space for an extra 24 passenger trains an hour, 85,000 further seats a day in and out of Birmingham and an estimated six million more journeys each year. The economic benefit is an estimated £649m pa by 2037. Key components of the spend would be £15m to £25m on freight loops and track improvements in Leicester, £150m to £200m on improving the Leicester Corridor to Birmingham and £15m to £25m on enhancements around Nottingham. Going under the West Coast Main Line at Nuneaton or going over it via a flyover would cost £110m to £250m. Midlands Connect has asked the Department of Transport for £25m to firm up the details in an outline business plan.

Dutch-owned Abellio, which will replace East Midlands Trains as the operator of the East Midlands franchise from August, has unveiled the purple branding it plans to use. The firm will invest £600m in new trains and upgrades to existing rolling stock with the fleet rebranded in stages between 2020 and 2022. East Midlands Railway or EMR, will be divided into three segments. The EMR Intercity identity will be used for long-distance trains between Sheffield, Derby, Nottingham, Loughborough, Leicester and London on the Midland Mainline, whilst EMR Regional is the new name for east-west routes and regional routes, such as Liverpool – Nottingham – Norwich. EMR Electrics will introduce a new service between London St Pancras, Luton Airport Parkway and Corby. A plan to reopen a Nottingham line for passenger services has also moved a step forward. Ashfield District Council has put a feasibility study out to tender for the project, which would see the existing freight-only line reopened and upgraded to connect Kirkby-in-Ashfield with the new HS2 hub in Toton via Pinxton, Selston, Langley Mill and Ilkeston.

On infrastructure, North Northamptonshire Investment Framework has outlined £307m of delayed projects in the north of the county. These include the £42m Isham bypass and a £30m upgrade of the Corby Northern Orbital. In 2018, the government allowed the county council to spend £70m of its infrastructure fund on services and its £64m deficit. A ban on new spending was lifted three months ago and the plan for two unitary authorities to replace Northamptonshire County Council and seven other district and borough councils will come into force in April 2021. The estimated cost of the reorganisation is £44m, but the councils will also have to fill a £15m funding gap.

In Northampton, the Borough Council has delay the town’s bid to become the UK City of Culture avoiding a battle with Chelmsford, Luton and Southampton for the 2025 title. The UK City of Culture status is designated by the government every four years. Recent winners, Londonderry in 2013 and Hull in 2017 all benefited economically; Coventry will have the title in 2021. The council cited time constraints and funding as reasons why the bid would not take place.