The State of Britain

WM

The wealthiest area of the WM was the Priorslee area of Telford, the poorest was the Aston University area of Birmingham, and Coventry and Warwickshire LEP has the best productivity growth in the UK

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes stated are after tax and housing costs are taken off. 

The analysis shows 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.

The wealthiest area of the WM was the Priorslee area of Telford at £39.500. This ranked the area 205th out of the 7,201 areas recorded. The poorest area of the region was the Aston University area of Birmingham with £12,900. This area was ranked 7,200 out of the 7,201 areas of recorded, the second poorest in England and Wales.

Like most regions of the UK, output per hour in the WM is below the UK average. Productivity per hour in the region was 10.4% below the UK average which ranked the region seventh 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 the WM’s performance.

Perhaps the most useful indicator 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.

At 4% above, the Coventry and Warwickshire LEP was one of eight economic regions which beat the UK average and was ranked 7th, all of the WM’s other LEPs recorded productivity below the UK average.

Greater Birmingham and Solihull was 16th at 5% below, the rest all performed poorly and ranged from 19% to 24% below the UK average. Worcestershire, Stoke on Trent/Staffordshire and the Marches were ranked 38th, 39th and 40th. As mentioned above, the Black Country LEP at 24% below was ranked 44th, the worst in the UK.

In terms of productivity growth, however, 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 WM’s results for productivity growth were better.

As mentioned above, with growth of 16% the Coventry and Warwickshire LEP was the best in the UK. The Black Country LEP was ranked 7th nationally with growth of 6%, beating the Marches which was ranked 13th with 4% growth.

Greater Birmingham and Solihull was 20th at 3%, Worcestershire 25th at 2% with Stoke on Trent and Staffordshire at 0%, meaning that none of the region’s LEPs recorded productivity levels lower in 2018 than 2010.

Despite this, all of the WM’s three subregions recorded productivity below the UK average. The West Midlands -7%, Herefordshire, Worcestershire and Warwickshire -8% and Shropshire and Staffordshire and the West Midlands -18%.

At a county level, with the exception of Solihull (+39%) and Warwickshire (+7%) all of the WM’s districts recorded productivity below the UK average. Herefordshire had the lowest productivity, 33% below the UK average.

The growth in hours worked between 2010 and 2018 in Herefordshire, Worcestershire and Warwickshire was 16%, beating Shropshire and Staffordshire and the West Midlands which each recorded 12%. In UK terms this level of growth was in the top fifteen of the country’s 40 subregions.

If the increase in economic output is also factored in, then the sub regional performances are also good, mirroring the region’s LEPs. Herefordshire, Worcestershire and Warwickshire was ranked 3rd in the UK with growth of 11%, the West Midlands was placed 6th with 9% and Shropshire and Staffordshire 22nd with 2%. 

More data from the ONS showed unemployment in the region was 1,000 higher at 133,000 between November and January; the slight uplift left the overall rate unchanged at 4.5%, the third highest in the UK. Northern Ireland had the lowest rate of 2.4%; the North East was 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 75.2% in the WM where 2.8m are employed; the UK rate was 76.5%.

The WM’s average property price increased by 0.4% to £200.628, which took the annual increase to 2.6%, the second highest in the UK. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

In Q2 2019 the WM economy reverses and plummets down the UK rankings but regional productivity grows above the UK average and WM earnings now ranked fifth

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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 WM’s growth has dropped from 1% to 0.8%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the WM ninth (previous ranking also ninth) and suggests the region has maintained its position relative to the other eleven parts of the UK. Over the same period UK growth was 1.4%; growth in London (ranked first) was 3.3%; and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are much worse. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the WM 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 WM economy contracted by 0.6%, down from 2.3% growth the previous quarter. This placed the WM eleventh (previous ranking fourth) 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, there was no surprise that the ONS’s figures also highlighted that the standalone quarter to June 2019 was also poorer for the region than the previous quarter. The WM economy contracted by 1.6% in April to June 2019, following growth of 0.2% in January to March 2019.

This placed the WM eleventh (previous ranking seventh) 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, the WM’s finance sector grew 6.9% but human health/social work activities and administrative/support service activities fell by 3.4% and 4.8%.

In general all sectors in the region shrank, with production, construction, services and agriculture sectors all falling by 2.6%, 1.8%, 1.3% and 0.6% respectively. Despite falling this quarter, the WM has shown strong growth in the construction sector relative to 2017. Agriculture and services have remained relatively steady since 2017, and production has fallen since the beginning of 2018.

Productivity

Like most regions of the UK, output per hour in the WM was below the UK average in 2018 according to ONS figures. Productivity in the WM was 10.4% below average which ranked the region seventh in the UK.

Two regions had productivity above the UK average, 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 WM moved up the rankings slightly to sixth in terms of output per job. This means that on average workers in the WM worked longer hours for each job compared with the UK average. The region’s 10.9% 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 WM was ranked fourth as output per hour grew by 1.6%. 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%.

Sectorally, productivity in accommodation/service activities was better than expected but transportation/storage 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 increased by 11,000 to 131,000 between October and December; the uplift of 0.3% took the rate to 4.4%, the third highest in the UK. 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 75.5% in the WM, where 2.8m are employed; the UK rate was 76.5%.

In December, average earnings in the WM increased by £4 to £595 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The WM was ranked fifth (previous ranking seventh).

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 WM’s average property price decreased by 0.4% over the month to £201,343, the drop took the annual increase to 1.4%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

WM sees the biggest increase in state spending in the UK, the region’s house prices rise the fastest in England and the UK’s largest ‘regeneration project’ approved

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the WM had a deficit of £14.9bn, a larger shortfall than the £12.9bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the WM’s deficit was £2,526, higher than the £2,209 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 WM was £73.8bn or £12,503 per head, the increase on the 2018 figure of £69.4bn was the largest in the UK. 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 WM collected £58.8bn 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 WM increased by 11,000 to 128,000 between September and November 2019; the increase of 0.3% took the overall rate to 4.3%, the joint second highest in the UK. 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 75.4% in the WM. UK employment was estimated at 76.3%.

WM average property prices increased the most in England during November 2019, the 1.7% uplift to £204,238, increased annual growth to 4.0%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

On transport, the Office of Rail and Road (ORR) is investigating Network Rail over its poor service on routes used by commuter favourite West Midlands Railways. Network Rail owns and operates rail infrastructure in England, Wales and Scotland. The ORR said the proportion of scheduled train stops made on time in the last 12 months up to 4 January was 57%, this compares to the national average of 65%.

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.

Work to extend the West Midlands tram network from Dudley to Wednesbury, incorporating 17 stops, has started. The Midland Metro, which currently connects Birmingham and Wolverhampton, is expected to carry passengers to Dudley and Brierley Hill by 2023.

The first phase of the project is to construct a £4.3m wall at Castle Hill. The tram extension in Birmingham opened from Grand Central station to the city’s library in December.

Plans for the UK’s biggest ‘regeneration project’ have been approved. The size of Birmingham’s Alexander Stadium for the 2022 Commonwealth Games will quadruple. Permanent capacity will increase to 18,000, with temporary seating taking it up to a limit of 40,000 spectators.

Birmingham was named as the host city for the games in December 2017, and it will be the UK’s costliest sporting event since London 2012. The 11-day games are budgeted at £778m, with £184m paid by Birmingham City Council and partners.

On infrastructure, funding for the Hereford bypass and southern link road has been withdrawn by the Marches LEP.  

The route of the £150m Hereford bypass and southern link road was approved in 2018, but a change in political control at the council led to possible alternatives being considered including building new bridges and a light railway on the Great Western Way.

As well as withdrawing the £27m the LEP is also seeking to claw back £3.8m already spent on the project.

The West Midlands jointly tops the 2018 growth league, Solihull the regional star, Walsall declines and the Birmingham LEP ranked 1st in the UK

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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 WM economy grew by 2.0% in 2018, down from the 2017 growth rate of 2.6%. This placed WM second (2017 ranking also second) 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 Solihull economy grew the fastest at 6.7%, followed by Warwickshire at 3.2% and Stoke at 2.3%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%.

Only one area of the region saw its GDP decline in 2018. This was Walsall at -8.0%. In UK terms, the lowest annual growth of subnational areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 5.0% to £49,328 was seen in Solihull which was top in the region. Indeed Solihull, at ninth, was one of two areas outside of London and the SE to feature in the UK top 10. GDP per head fell by 9.6% in Walsall to £19,412.

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 WM economy were information/communication at 7% and administrative/support services and education both at 4%. Those areas that did not perform well were agriculture which dropped by 5%, electricity/gas supply down by 2% and accommodation/food service fell by 1%. Overall the services sector grew by 2.9% but construction fell by 0.4% and production fell by 0.3%.

The 2018 performance of the region’s six enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, Greater Birmingham and Solihull was ranked 1st in the UK (2017 ranking 27th) with growth of 2.8%. Stoke moved up the rankings from 33rd to 10th with growth of 2.1% and Coventry & Warwickshire moved up two places to 12th. Worcestershire moved up one place to 15th, but with slower growth, the region’s other two LEPs fell down the rankings, with the Black Country dropping from tenth to 31st and The Marches moving from fourth to 32nd.

More data from the ONS showed unemployment in the WM increased by 10,000 to 132,000 between August and October 2019; the increase of 0.3% took the overall rate to 4.5%, the second highest in the UK. 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 75.1% in the WM. UK employment was estimated at 76.2%.

WM average property prices fell by 1.6% during October 2019 to £198,345, which took annual growth to 0.2%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

The WM economy slips down the UK rankings, a significant decrease in regional unemployment, and internal discord perceptible during the HS2 review

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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. 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 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. WM towns include Burton upon Trent, Crewe, Dudley, Hereford and Worcester amongst others.

The deputy chair of the HS2 review panel and critic of the project, Lord Berkeley, says he has been given no opportunity to influence the final report. Lord Berkeley, a civil engineer who worked on the construction of the Channel Tunnel, was appointed when Transport Secretary, Grant Shapps, launched the review in August.

The Department for Transport would not confirm when the Oakervee review would be published, but it seems likely this will now be after the election.

The new £88bn railway line would run from London to the West Midlands, Manchester and Leeds. Trains on the London to Birmingham route would be 400m-long, have up to 1,100 seats and would be capable of reaching speeds of up to 250mph. They would run as many as 14 times per hour in each direction and cut Birmingham to London journey times from one hour 21 minutes to 52 minutes.

Also on rail, West Midlands Trains routes were severely disrupted last month. West Midlands Trains operates West Midlands Railways and London Northwestern Railway, running services from London Euston to Birmingham and around the Midlands. On some days, 55% of its services were late or cancelled.

Train crew shortages, broken-down trains, a loss of power to overhead wires between Watford Junction and London Euston were cited as excuses.

Figures released by Network Rail in October showed one in five trains operated by West Midlands Railway were failing to arrive on time. This was the worst performance since the firm took over the franchise nearly two years ago.

The operator said a new timetable introduced in May had proved too complicated and a simplified timetable would be introduced on 15 December.

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 West 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 WM economy grew by 2.3%, down from 3.2% growth the previous quarter. This placed the WM fourth (previous ranking second) 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 showed that growth in the region’s economy eased off slightly in the quarter to March 2019. The WM economy grew by 0.5% in January to March 2019, following growth of 0.6% in October to December 2018.

In this period, the construction sector grew by 4.5% and made the biggest positive contribution to growth but manufacturing dipped by 1.7%, education fell by 4.2% and energy dropped by 6.5%.

In terms of sectors, services contributed positively to GDP growth, whereas both the agriculture and production sectors contracted.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the WM ninth (previous ranking eleventh) with growth of 1.0%, which suggests the region has underperformed other parts of the UK since the winter.

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 positively, data from the ONS showed unemployment in the region decreased by 14,000 to 121,000 between July and September; the decrease of 0.5% was the second best performance in England and took the overall rate to 4.1%. 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 75.1% in the region. UK employment was estimated at 76.0%.

In September, average earnings in the WM were up by £14 to £591 per week. 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.

WM’s average property prices fell by 0.4% over the month to £201,273, which took annual growth to 1.6%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

A substantial drop in regional unemployment, bus services upgraded and battery operated trams in Brum

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Unemployment in the WM decreased by 23,000 to 117,000 between June and August, the fall of 0.8% was the second best in the UK and left the overall rate at 4.0%.

The South West continued to record the lowest 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 74.8% in the WM. UK employment was estimated at 75.9%.

WM average property prices increased by 1.5% to £201,510, which took annual growth to 2.4%. 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 WM fourth 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

The region will benefit from an extra £90m that the Department for Culture, Media and Sport has added to the Cultural Development Fund, which is for arts, culture, heritage and the creative industries in towns and cities outside London. Worcester was a winner last year, now £7m has been allocated to Coventry for its UK City of Culture 2021 plans.

Backed by the West Midlands Combined Authority, Peaky Blinders creator Steven Knight has launched Create Central to boost the region’s creative output and promote the area as a production base.

Evidence suggests Peaky Blinders has contributed to an uplift in screen tourism to the West Midlands, but the series is largely shot in Yorkshire and was initially funded by Screen Yorkshire.

A planning application has been submitted for the £70m redevelopment of Birmingham’s Alexander Stadium for the 2022 Commonwealth Games. The stadium will increase its permanent seating capacity from 12,700 to 18,000, and with additional temporary seating the capacity will be more than 30,000.

In Herefordshire, the Council is reviewing the southern link road and Hereford bypass projects.

If the local authority decides to scrap the former, then The Marches Local Enterprise Partnership will seek to retrieve its £3.8m which has been already spent on the project. Whilst greater devolution from Westminster has its benefits, infrastructure funding from multiple agencies also has its difficulties.

In Shrewsbury, the run-down Riverside Mall shopping centre and nearby medical practice, multi-storey car park and bus station could get redeveloped after an intervention by Shropshire Council following market failure.

The authority has asked for designs for the nine-acre Riverside precinct, eight years after a £150m upgrade from the previous owners did not proceed. The council is hoping to appoint consultants by early December, with phased demolition due to start by the end of next year.

Jobs

Up to 200 jobs are to be axed by Stoke-on-Trent City council. Reduced headcount will come through voluntary redundancies, as well as leaving 64 posts vacant. The cuts will enable the council to divert funds in to children’s services.

Wrexham-based firm Tomlinson Dairies, which had operations in Shropshire, has gone into administration. The firm employed 330 overall.

Transport

CBI West Midlands, East 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.

Bus services in Birmingham and Dudley are to be upgraded with £30m of funding for new express lanes, upgrading junctions and better bus stops. The Department for Transport has committed £24m with the balance of the funding from West Midlands Bus Alliance partners, (Birmingham City Council and Transport for West Midlands, part of the West Midlands Combined Authority.)

The money forms part of the government’s long-term bus strategy and £220m funding settlement, which it hopes will see many cuts to services reversed. There will also be support for local authorities who want to create London-style franchised services in their areas. Greater Manchester is due to consult on adopting a proposed franchised model shortly.

Tram operator West Midlands Metro has bought 21 battery-powered trams from manufacturer CAF. The £83.5m deal includes the trams, technical support and battery management services over 30 years.

The trams will operate on new sections of the line between Grand Central and Hagley Road which are free of overhead cables. The current fleet will also be fitted with battery units.

Walsall and Worcester see deprivation increase, the Peaky Blinders effect in the West Midlands and the region sees the biggest fall in unemployment in the UK

Reading Time: 4 minutesThe Ministry of Housing, Communities and Local Government (‘the Ministry’) 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, the Druids Heath area of Birmingham is the first WM entry and is ranked 45th. The Ministry divides England up into 32,844 neighbourhoods averaging about 1,500 residents or 650 households each.

In terms of local authorities, 41% of Birmingham was classified as deprived which ranked the city seventh worst in the UK, Stoke was 12th. In terms of performance since 2015, two areas of the WM have seen deprivation accelerate the fastest in the UK. Walsall was ranked third and saw deprivation increase by c6%, with Worcester ninth at c5%. In comparison, Wolverhampton and Sandwell are no longer on the list of the 32 most deprived authorities.

Walsall and Worcester are two of the 16 WM towns invited to apply for regeneration funding of up to £25m 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 Stoke, Oswestry and Wednesbury some of the half dozen or so WM towns that will benefit.

The West Midlands Combined Authority (‘WMCA’) will invest £18m in the UK’s centre for battery development in Coventry. This adds to government funding of £108m. The facility is due to open in March 2020 and will initially employ c100 people. In another intervention, WMCA (via Telford and Wrekin Council) will outlay £3.7m to redevelop 14 hectares of brownfield sites – enough for 540 homes.

During a tour 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. HS2’s total cost has risen from £62bn to between £81bn and £88bn.

The West Coast rail franchise changes hands at the end of the year and a report due to go to the WMCA has set out the planned improvements. First Group and Italian state operator Trenitalia will run the franchise between 2019 and 2031 and will refurbish first class lounges at Birmingham New Street; offer free wi-fi at six more stations; provide more direct services to London from Wallsall and Shrewsbury; and install more car parking at Birmingham International.

Also on the trains, plans have been submitted to build two new railway stations, Kings Heath and Hazelwell, on the Camp Hill line south of Birmingham. The line’s stations closed during 1941 and since then the track has only been used for freight and infrequent through-services. A third station at Moseley is also planned.

Development
The WMCA’s economic development offshoot the West Midlands Growth Company (WMGC), has suggested screen tourism, fuelled by the success of Peaky Blinders, has contributed to the 2.6% increase in visitors to the region. The West Midlands had a record 131.4m visitors last year, of which overseas tourists contributed £16.7m to the economy. The gold standard in screen tourism, however, has been set by Game of Thrones. The show is estimated to have brought £251m into Northern Ireland since production began in 2010. Figures from Tourism NI suggest that 350,000 fans visit Northern Ireland every year as a result and spend £50m.

The Stats
For the first time, the ONS has published quarterly GDP estimates for the West 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 WM economy grew by 3.2%. This ranked the WM second out of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4% whilst at the bottom the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed administration/support services grew by 8.7% and made the biggest positive contribution to growth but manufacturing fell by 1.5%, information and communication fell by 5.0%, and the human health and social work industries fell by 3.0%. Overall, the construction sector contributed positively to GDP growth, the services sector was flat and the production sector contracted. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked the WM eleventh with growth of 1.1%, 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 WM decreased by 23,000 to 122,000 between May and July, the fall of 0.8% was the best in the UK and took the overall rate to 4.2%. 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 74.6% in the NW. UK employment was estimated at 76.1%.

WM average property prices increased by 1.2% to £199,802, which took annual growth to 1.8%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.

West Midland’s economic growth near the bottom of the UK economic league but the drop in unemployment the best in England

Reading Time: 4 minutesGrowth in the West Midlands was 1.1% in the year to June 2019 according to estimates from ESCoE. The slight drop from the previous quarter’s growth of 1.2% ranked the West Midlands second worst overall (out of twelve UK ‘regions’) and suggests the region’s economy is stalling. 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, growth in the West Midlands is similar to most other regional economies which have shrunk.

Unemployment in the West Midlands decreased by 14,000 to 134,000 between April and June, the decrease of 0.5% to 4.6% was the best in England. 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 74.4% in the West Midlands. UK employment was estimated at 76.1%, the joint highest since comparative records began in 1971.

In June, average earnings in the West Midlands increased from to £565 to £577 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 West Midland’s average property prices increased during the month, the 0.9% uplift to £198,993 took the annual growth rate to 2.6%; the second 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) between Birmingham and London, 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 1 (Birmingham to London) is due to open at the end of 2026. 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.

The impact of the HS2 review on the £137m extension to the West Midlands Metro has yet to be assessed. With the funding in place, Transport for the West Midlands needs Ministers to give it the powers to build the extension but these have not been forthcoming. The project will connect Birmingham railway stations, New Street, Moor Street and Snow Hill and was intended to be operational in time for the Commonwealth games but services will not now start until 2026. The revised plan will see the line built in two halves and connected in the middle once HS2 has built its station.

FirstGroup and Italian firm Trenitalia, are to take over the running of the West Coast Mainline (‘WCM’) train route, connecting London Euston to the West Midlands from December, replacing Virgin Trains, which was barred from bidding. The new contract will operate in two phases. The first will run from 8 December to March 2026, when First Trenitalia will operate the existing InterCity West Coast services. The second phase will run from March 2026 to March 2031, when it will operate the HS2 high-speed rail service. Given the HS2 project has been put under review, this may have to be changed even before First Trenitalia starts operating the trains. The firm said its £117m investment would mean 56 Pendolino trains refurbished, more reliable free Wi-Fi, better catering, and more than 260 extra services each week by 2022. FirstGroup also operates the South Western Railway and TransPennine Express. Virgin’s WCM partner, Stagecoach – which refused to take on pensions risk – has won the right to a judicial review of the decision to block it from bidding. Unlike other franchises Virgin is consistently rated highly by West Midlands travellers. In the latest National Rail Passenger Survey, of the 25 operators in the country, it was ranked second.

Wolverhampton born Robert Jenrick is the new ‘Minister for the Midlands’. The Local Government Secretary says he will work to develop a refreshed Midland’s 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 Minister of State. To avoid the impression of favouritism, Berry is entitled to attend Cabinet.

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, Lincolnshire, South Yorkshire and Tees Valley & Durham are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status, but no part of the West Midlands has yet fallen below this level.

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. Again, no part of the West Midlands has yet fallen below this level.

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 funding pots like the City Deals is yet to be determined.

Electric Jaguars will be built in the region and no evaluation is being made of the impact of £1.1bn of taxpayers’ money on West Midland’s economic growth

Reading Time: 3 minutesUnemployment in the West Midlands decreased by 13,000 to 140,000 between March and May, the decrease of 0.4% to 4.8% was the best in England. 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 West Midland’s average property prices increased by 0.2% to £196,489 during the month which uplifted the annual growth rate to 2.7%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

In its review this month of the 38 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 are two overlapping LEP areas in the West Midlands which means that these LEPs will be unable to bid for funds from the Government’s proposed Shared Prosperity Fund, which will replace EU structural funding after Brexit. Greater Birmingham and Solihull (‘GBS’) LEP overlaps with Worcestershire LEP in the south of the region and with Stoke-on-Trent and Staffordshire LEP in the north.

The GBS LEP has received £433m, the 5th highest in England since 2015, whereas Worcestershire LEP has received £72m, the second lowest in England. Other West Midland’s LEPS awards have been Black Country £218m, Coventry and Warwickshire £132m, Stoke-on-Trent and Staffordshire £121m and The Marches £105m. The Ministry does not to evaluate the Local Growth Fund which means it has no understanding of what impact spending through LEPs has on local economic growth. The latest growth figures for the region from ESCoE showed growth at 1.2% which compared with the UK average of 1.5%.

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 2,680 jobs were created in the Birmingham City Centre Enterprise Zone, the third best performing zone in England, and 146 jobs in the Hereford 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. There are plans to expand one of the newer areas at the 140 hectare Ceramic Valley enterprise zone in Stoke-on-Trent.

On jobs, Jaguar Land Rover (JLR) is to build a range of electric vehicles at its Castle Bromwich plant in Birmingham securing 2700 jobs. In January, the firm said it would cut 4,500 jobs, with the majority coming from the UK. That followed 1,500 jobs lost in 2018. Initially the plant will produce an electric version of the Jaguar XJ replacing the petrol and diesel versions which have been made since 1968.

German food processor, Muller, has spent £50m upgrading its site at Donnington Wood, Telford, allowing it to produce 500m pots of yoghurt a year. By doubling the size of its factory and reducing its dependence on imports it has created 65 new jobs. Three new production lines have been built, alongside a new cooling facility and a new warehouse. Three existing lines have also been upgraded. Muller said if demand continued to grow it would consider expanding further in the future, to produce 700m pots a year.

More positive news in Stoke. In January, insurance firm Ageas announced it was closing a call centre at a leased office at Trentham Lakes. The Atlanta Group, which owns insurance firms Autonet and Swinton, says it’s taking on the lease from September and will offer work to most of the 220 staff.

A material cut in car production impacts the region, the £250m cost of crossing the West Coast Mainline and the UK’s biggest current regeneration project

Reading Time: 4 minutesUnemployment in the West Midlands decreased by 4,000 to 145,000 between February and April, a drop of 0.1% to 5.0%. 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 West Midlands had the second highest rate. The UK unemployment rate stands at 3.8%.

West Midland’s average property prices fell by 0.2% to £195,498 during the month which trimmed the annual growth rate to 2.2%. In comparison, UK prices increased by 0.7% to £228,903 during April which held the annual growth rate at 1.4%.

The West Midlands probably contributed to the shrinking of the economy in April with a sharp fall in car production and an easing of stockpiling by manufacturers. The economy contracted 0.4% from the month before according to the ONS which meant growth for the three months to April slowed to 0.3%. Factory shutdowns designed to cope with disruption from a March Brexit cut UK car production in April by nearly half. Jaguar Land Rover shut down production for a week in April which affected thousands of staff at Castle Bromwich, Solihull and Wolverhampton. The firm is to ask more than 2,500 workers to switch to a four-day week to secure the future of the Castle Bromwich plant where production of the XJ model ends on 5 July. The 37 hours employees currently work in five days would be spread over four. In September 2018 c1,000 workers at the plant moved from a five-day to a three-day week from October until Christmas.

In the automotive supply chain, c180 jobs are threatened as car component manufacturer Mahle, considers closing its plant in Telford. German-based Mahle makes engine systems and components used for mobile machinery, rail transport and marine applications throughout the world. In construction, c200 people have been made redundant at design and construction firm the Shaylor Group after it ceased trading. The company provides services across the UK from its headquarters in Walsall but financial pressures has led to administrators being appointed.

There were more job losses in Burton-upon-Trent, when food processor Kerry Foods announced the closure of its factory. The firm – which has 18 factories across Ireland and the UK – had a ready-made meals contract with Tesco for 19 years but lost it to another supplier in October. About 90% of the work of the factory was production for Tesco so the loss of 900 jobs will impact the local economy.

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.

Also on the trains, stripped of its West Coast Mainline franchise from May 2021, Virgin Trains plans to launch a new hourly train service between Liverpool and London. According to the regulator – the Office of Rail and Road – it must generate extra demand rather than take revenue away from other operators. Few rail operators run services in competition with franchise holders. Virgin was disqualified from bidding on three franchises after a row with the Department for Transport over pensions’ liabilities. The firm has consistently scored highly in National Rail Passenger Surveys with the latest survey showing it was only beaten by the Heathrow Express.

Also on transport, one of the UK’s favourite private sector roads, the M6 Toll, has raised prices for the third year. The cost of driving on the UK’s only toll motorway will increase by c5% or 50p per journey next month say operator Midland Expressway Limited, although a new weekday off-peak rate will also be introduced. Drivers on long north south drives are unlikely to be deterred from using the Toll but the economic impact of forcing more traffic back onto the M6 will not be welcome. The 27-mile road, from Cannock, Staffordshire to Coleshill, Warwickshire, opened in 2003 at a cost of £900m and has largely been loss making due its debt burden. It was sold in 2017 to a group of Australian pension funds who are likely to now see a profit following a debt restructuring. With most of the original investors likely to have taken a haircut and congestion on the M6 now likely to increase, the merits of UK toll roads remain controversial.

One of the UK’s largest economic development projects, the 11-day Birmingham 2022 Commonwealth Games, will cost £778m, with £184m paid by Birmingham City Council. Some of this cost will be funded by a £50m a loan which will be paid back by Birmingham council tax payers over 40 years. Partners including the West Midlands Combined Authority, LEPs and other Midlands Engine local authorities will also share the ‘local cost’ with three-quarters of the public funding coming from central government. Legacy benefits for the city will include 1,500 new homes, better public transport, improved roads, cycling and walking facilities and other infrastructure like the upgraded Alexander Stadium. Estimates of economic benefit range from £300m – £400m locally to £1bn+ nationally.

More positive news for Birmingham, after consultancy company Mercer found the city had become a more affordable place for firms looking to relocate staff to the UK. The weak pound and low inflation are cited as the key reasons why.