The State of Britain

EM

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.

Average growth but a sharp drop in unemployment, Bombardier hopes to help provide a route to the Pyramids and Derbyshire County Council plans festivities

Reading Time: 4 minutesGrowth in the East Midlands ticked up by a modest 0.2% to 1.6% in the year to March 2019 according to estimates from ESCoE. At 2.7% and 0.7% London and Northern Ireland had the highest and lowest growth rates in the country. The East of England was the most improved region with growth accelerating from 0.9% to1.9%. The UK growth rate for the same period was 1.5%.

Unemployment in the East Midlands fell sharply by 23,000 to 98,000 between January and March; the drop of 1.0% to 4.0% was the best in the UK. At 2.4% and 5.4% 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%.

In March, average earnings in the East Midlands increased to £574 per week. London had the highest average earnings of £762 whereas Northern Ireland had the lowest of £513. In the UK average earnings grew by 3.3% or by 1.5% after inflation.

East Midlands average property prices fell by 0.4% to £190,171 during the month which trimmed annual price increases to 2.9%. In comparison UK prices dropped by 0.2% to £226,798 during March which cut the annual growth rate to 1.4% although transactions were up by 1.4%.

In its estimate of regional public spending and regional tax revenues in 2018, the ONS concluded that the East Midlands had a deficit of £6bn. This compared with London which had the highest surplus of £34.3bn. On a per person basis the East Midlands deficit was £1,263, London had the highest surplus of £3,905 per person and Northern Ireland had the biggest deficit at £4,939. The only areas of the UK to run surpluses were London, the South East of England and the East of England. At a national level, the UK had a deficit of £636 per person which split into deficits of £106, £2,452, £4,395 and £4,939 for England, Scotland, Wales and Northern Ireland.

Positive news for Derby after Bombardier was named as the preferred bidder to develop and build monorail cars for two lines through Cairo and to the pyramids at Giza. The firm would potentially build 70 four-car units – as part of the £2.65bn project – to be exported to Egypt between 2021 and 2024. Thirty-four miles of monorail will connect the New Administrative City with East Cairo and a second line of 26 miles will run between Sixth of October City and Giza. The project will involve both the civil engineering of the monorail infrastructure as well as manufacturing the cars which could mean c100 new jobs. Derby has been making trains for 180 years but this is the first export of overseas rolling stock from the facility since a South African order in 2010. Also on engineering, Lotus Cars announced 200 new jobs as part of its expansion programme some of which may be at the sub-assembly manufacturing plant in Wellingborough. Lotus launched its new electric sports car, the Type 130, last month.

Another vote of confidence in Derbyshire after Sports Direct confirmed the sale of its Shirebrook headquarters in a £120m deal to a Malaysian pension fund. Mike Ashley’s discount sportswear retailer will take a 15-year lease and continue to operate from the site. The firm recently decided to close its Wigan warehouse offering the 300 Lancashire staff alternative work at Shirebrook. At least 3,500 agency workers and 500 permanent staff are employed at the site. Not such good news in Leicester as 82 year old well known café Brucciani has closed. The business had two cafes and a bakery in the city, employing around 50 people.

On the trains, The House of Lords Economic Affairs Committee has raised concerns that funding for HS2 through parts of the East Midlands could be at risk. Peers fear costs could be out of control leaving insufficient funding for the northern phase. Current plans would see a hub station built at Toton in Nottinghamshire. The region’s chamber of commerce says some companies are unsure whether to invest in new premises along the proposed route.

The operator of the East Midlands railway franchise is suing the government after it was barred from re-bidding for the contract. In April, it was announced Dutch government-owned Abellio will take over the service in August after the DfT rejected Stagecoach’s bids for the East Midlands franchise, the South Eastern franchise with Alstom, and a renewal of the West Coast franchise with Virgin Trains and France’s SNCF. Stagecoach said it could have been left with liabilities of £1.6bn if it had agreed to accept pension risks. In 2012, the DfT’s decision to award the West Coast Main Line rail franchise to FirstGroup was scrapped after mistakes were made in the way in which inflation and passenger numbers were accounted for by civil servants.

On regional governance, Communities Secretary, James Brokenshire, has approved the merger of South Northamptonshire, Northampton Borough and Daventry Councils into the new West Northamptonshire unitary authority. Also approved is a second unitary authority – North Northamptonshire – which will oversee Corby, East Northamptonshire, Kettering and Wellingborough. The unitary authority means all council services will be under one roof, whereas the county council was in charge of services such as education, health and social care, while the borough and district councils looked after waste, recycling and planning applications. The unitary authorities will be established following local elections in May 2020 (this month’s local elections in Northamptonshire were cancelled) and they will be operational by April 2021, bringing a conclusion to the future of local government in Northamptonshire after the financial collapse of the County Council.

Leicestershire County Council will spend £0.5m pa on new staff to support housing and economic growth claiming the county faces pressure for more roads, schools and transport infrastructure that could cost £600m over the next 25 years.

Derbyshire County Council will invest in ‘A Festival of Derbyshire’ to help boost the county’s tourism industry; showcasing the 70th anniversary of the Peak District National Park and 20 years since Derwent Valley Mills became a World Heritage Site. Tourism is worth £2.1bn to the local economy supporting 29,000 jobs directly and indirectly. Yorkshire has seen record numbers of overseas visitors since hosting the Tour de Yorkshire.

Nottinghamshire energy projects, changes on the East Midlands’s railways and the Government announces 12 new Institutes of Technology across the UK but the East Midlands’s misses out

Reading Time: 3 minutesUnemployment in the EM fell by 12,000 to 104,000 between December and February; a cut of 0.6% to 4.2% – the biggest drop in the UK. The SW of England had the lowest unemployment rate in the country at 2.6% and the NE of England had the highest at 5.6%. The national unemployment rate stands at 3.9% and UK average earnings grew by 3.5% or by 1.6% after inflation.

EM average property prices fell by 0.5% to £190,199 during the month which trimmed the annual growth rate to 1.6%. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

The EM benefited from some regional job displacement this month when Sports Direct announced the closure of its warehouse in Wigan, threatening 300 jobs. The site will close in June with employees offered alternative employment in Shirebrook, Derbyshire. However, further south in the county, the Muller plant in Foston is at risk of closure as the firm announces plans to review its dairy network which is experiencing over-capacity; 228 staff are affected.

Troubled Vision West Nottinghamshire College hopes to save £2.2m by reducing headcount by 55 employees, mostly in management and support roles – the college has told 72 staff they are at risk of redundancy. The college has already made more than 100 staff redundant and the latest cuts will mean the construction and employability training centre in Sheffield will close. At the city’s Trent University part of the Brackenhurst campus has had to be demolished after a large crack appeared in an exterior wall of a lecture theatre; the new £10m Reception and Environment Centre is due to open in September.

Supported by funding of £170m, the government has announced the locations of 12 Institutes of Technology in England. The Institutes will be collaborations between universities, further education colleges, and leading employers, for example Nissan and New College, Durham. The dozen are spread across the UK, none are in the EM.

Two significant votes of confidence in the region from the East. First, Kuwaiti investors have taken a 50% joint venture stake with Intu in Derby’s Intu shopping centre via a £186m purchase. Second, a Northampton-based shoe manufacturer has opened a store in Tokyo where footwear made in the county is seen as a high end brand, Japan is a key export market for Northamptonshire shoemakers. Tricker’s – which exports 80% of its shoes – also hopes to expand further into South Korea and the United States.

On regional transport, Abellio is to take over the running of the East Midlands railway after it was awarded an eight year franchise. The East Midlands line operates trains between Norwich, Nottingham and Liverpool. The Dutch state-owned firm already operates five other rail franchises. The current franchisee, Stagecoach, was disqualified from re-bidding after a row with the DfT over pension liabilities. Abellio has promised to replace the existing intercity fleet and install an extra 80% of capacity on morning peak services into Nottingham, Lincoln and St Pancras. Smart ticketing, a new express service from Corby through Luton into London and 15-minute delay repay compensation will also be introduced. More than £17m will also be invested in improving station facilities across the route.

In the air, Scottish airline Loganair, will launch new routes from East Midlands Airport to Brussels and Inverness. Starting in September, the airline will fly six times a week to Inverness and daily to Brussels.

New research by PricewaterhouseCoopers suggests high streets across the East Midlands have seen the largest fall in the number of shops over the last five years. In 2018, 436 shops closed across the region with only 243 new shops opening; Nottingham saw the highest net loss in the region with 39 stores. Northampton, has lost three major department stores in the last 5 years. In response Northampton Borough Council has created a new Board, Northampton Forward, which has expressed an interest in bidding for money from the government’s £620m Future High Streets Fund.

A key regional development project has suffered a setback due to EU procurement rules. Derby City Council intended to invest £6.4m in a new office block on Bold Lane, – which would accommodate 300 staff – but a ruling at the Court of Appeal against West Berkshire Council has deemed such developments unlawful.

Regional prosperity would be enhanced by a relaxation of the UK’s rules on fracking which – according to the UK’s shale gas tsar who resigned after six months – was being throttled by rules preventing mini earthquakes. Under current rules, drilling must be stopped for 18 hours if it triggers earth tremors above a 0.5 magnitude. This compares with America where a 4.0 Richter scale limit is allowed and where, according to energy firm Ineos, c1m shale gas wells have been drilled safely. Ineos is carrying out tests around Clipstone in Nottinghamshire and believes the UK could emulate the shale gas boom in the US – most of the UK’s shale gas reserves lie under the north of England.

A site near Rufford Country Park could see methane gas extracted from the ground for the next 25 years. Nottinghamshire County Council approved drilling for three weeks to assess whether there is enough gas to make the scheme profitable. If viable, generators will be installed to turn the gas into electricity.

Unemployment in the EM ticks up, continued worries about the region’s suboptimal local government and two key sectors remembered

Reading Time: 4 minutesUnemployment in the East Midlands increased by 4,000 to 114,000 between November and January; the increase of 0.2% to 4.7% signalled a below average performance in UK terms. At 2.9% and 5.2% the SW of England and Yorkshire & Humberside had the lowest and highest unemployment rate in the country respectively. The UK unemployment rate stands at 3.9%.

In March average earnings in the East Midlands increased to £564 per week. London had the highest average earnings of £846 whereas the North East had the lowest of £523. In the UK average earnings grew by 3.4% or by 1.5% after inflation.

More positively, East Midlands average property prices increased by 0.2% to £192,757 during the month which added to the annual growth rate of 4.4% – the highest in England. In comparison UK prices dropped by 0.8% during March which cut the annual growth rate to 1.7%. The East Midlands market was also slower with the latest figures to September 2018 showing volumes down by 2.1%.

The disruption caused by Storm Gareth to road and rail travel compounded by other problems such as repairs to potholes causing hours of traffic delays on the M1 in Leicestershire will affect the economic performance of the Region. Adding this to some disappointing announcements from some key regional employers made for a largely forgettable month for the region.

The Leicester factory – which employs 200 people – that makes Fox’s Glacier mints could close if Fox’s owner Big Bear Confectionery merges with Tangerine Confectionery, operations would move to Pontefract and Blackpool. Big Bear’s other brands include Poppets, XXX mints and Just Brazils. Boots – the largest private sector employer in Nottinghamshire with about 5,800 people at the Beeston site – has announced plans to reorganise its head office; up to 350 jobs are at risk. About 800 employees are now entering a 45-day consultation as the company seeks to reduce costs at the site by 20%. Lidl’s regional distribution centre in Lutterworth is due to close on 31 July 2020, putting another 350 jobs at risk. Staff can transfer to Lidl’s new regional distribution centre but it will mean travelling 50 miles to Peterborough. The company will also offer alternative employment opportunities in Lidl stores or a redundancy package. Also sofa retailer Harveys has said it plans to move its Lutterworth customer services department to Accrington putting 68 jobs are at risk. The firm has decided to consolidate its Harveys and Bensons customer services. Finally Notts County owner Alan Hardy’s design company Paragon Interiors Group has gone into administration.

One of the few bright spots was Toyota’s plans to start manufacturing hybrid cars for Suzuki at one of its UK factories; the plant in Burnaston, Derbyshire, is part of a global deal to share resources. The manufacture of the new model will start at the end of 2020 and will not lead to extra jobs or investment but will strengthen the long term viability of the plant which benefited from a £240m upgrade two years ago.

A bid for funding from the Housing Infrastructure Fund for key regional infrastructure projects will be made this month. Led by Nottinghamshire County Council in partnership with 6 other local authorities the funds are sought for an East Midlands Network of Garden Villages which form part of the overall East Midlands HS2 Growth Strategy. Part of the £76m bid will focus on improving infrastructure in the area around the East Midlands HS2 Hub Growth Zone at Toton and the adjacent Chetwynd Barracks with the remaining £50m split between the future Infinity Garden Village and Chesterfield Town Centre; delivering 9,000 new homes across the two sites. Other regional developments include the approval of a 215,000 sqm warehouse near Isham in Northamptonshire and news that Nottinghamshire County Council has completed its £5m purchase of a company that repairs the county’s roads; Via East Midlands Ltd was previously half owned by Cornwall Council.

On East Midlands transport there was positive news that the electrification of the Midland Mainline up to Market Harborough is now being planned.
Electrification was due to stop at Kettering but the Department for Transport has confirmed that electrification plans will include Market Harborough as part of the £1.5bn Midland Mainline programme. Diesel-only trains currently running on the Midland Mainline are to be replaced with bi-mode trains which can run under electric power where lines are electrified, reverting to diesel where lines are not.

Issues with the region’s suboptimal local government continue with fears that Brexit has rendered HMG too busy to approve plans to form the new West Northamptonshire unitary authority. South Northamptonshire, Northampton Borough, Daventry and Northamptonshire County Councils submitted the merger plans last summer but no decision appears imminent. A second unitary authority – North Northamptonshire – will oversee Corby, East Northamptonshire, Kettering and Wellingborough. Initial estimates were that the two new councils would cost £30m to establish but now it appears a further £14m is needed; revised estimates include £7.9m on redundancies – almost £3m more than estimates in the original PwC report – £1.7m on relocation costs and £5.3m on consultancy. The mergers follow recommendations by a government inspector after a financial crisis at the county council.

Finally two key regional sectors, one past and one present, were remembered this month. Forty years ago Europe’s largest steelworks closed when British Steel said the Corby works – which employed half the town – was no longer viable. Thousands – many from Scotland – were laid off; part of the steel industry still remains but on a vastly smaller scale. Northamptonshire is still the shoemaking capital of the world hailed the British Footwear Association – based in Northamptonshire – which has now represented the industry for 120 years. Northamptonshire has a long history of boot and shoemaking dating back to Victorian times but most mass production moved abroad from the mid-20th Century due to lower costs. Since then the remaining firms which moved up market have benefited from selling luxury handmade shoes globally.