The State of Britain

WM

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.

Below average growth, a Beat the Bots fund and the West Midlands is the first region to agree a local industrial strategy with the government

Reading Time: 4 minutesGrowth in the West Midlands ticked up by a modest 0.1% to 1.2% 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 of the UK with growth accelerating from 0.9% to 1.9%. The UK growth rate for the same period was 1.5%.

Unemployment in the West Midlands fell by 3,000 to 149,000 between January and March, the drop of 0.1% to 5.1% still meant the region had the second highest rate in the country. 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 West Midlands dropped to £565 per week. London had the highest average earnings of £762 whereas the Northern Ireland had the lowest of £513. In the UK average earnings grew by 3.3% or by 1.5% after inflation.

West Midland’s average property prices fell by 0.5% to £196,571 during the month which meant annually prices grew by 3.4%, the second strongest growth in England. 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 has concluded that the West Midlands had a deficit of £13.2bn. This compares with London which had the highest surplus of £34.3bn. On a per person basis the West Midlands deficit was £2,274, whereas 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 splits into deficits of £106, £2,452, £4,395 and £4,939 for England, Scotland, Wales and Northern Ireland.

Positive news in the region’s engineering sector as sports car manufacturer Lotus Cars announced 200 new jobs as part of its expansion programme some of which will be at a new engineering office in Warwickshire. Lotus launched its new electric sports car, the Type 130, last month. Lotus has sub-assembly manufacturing facilities in Worcester which supplies its main factory in Norfolk. General Electric (GE) in Rugby will make the second batch of Type 26 Frigates motors. GE previously said the work would be moved to France which threatened 250 jobs. GE confirmed the facility would remain open but with reduced activities which will affect headcount.

In Stoke-on-Trent, the college will lose 39 jobs as part of a restructuring plan to make savings of £1.2m in staffing costs. The college employs more than 500 people and has around 10,000 students each year over two sites. Also in the city, it is not clear what impact British Steel’s liquidation will have on a sales office or on a metal selling centre in Wolverhampton.

On infrastructure, work on the £56bn HS2 high speed railway between Birmingham and London through Warwickshire is now supporting 9,000 jobs. More than 2,000 companies are working at 250 sites across the country according to figures released by the company. Work is continuing to construct the new Curzon Street station in the centre of Birmingham, which will be linked to the tram network as well as rail networks to the wider West Midlands.

Shropshire Council is working with the Welsh Assembly on plans to turn the A5 around Oswestry into a dual carriageway which would bring economic benefits to both sides of the border. It is the only section of the A5, which runs between London and Holyhead, to be single carriageway. The Council secured £54m from the government for Shrewsbury’s bypass earlier this year.

A key intervention this month after the Government invested a further £28m in the electric car battery development centre in Coventry. The funding for the UK Battery Industrialisation Centre adds to an £80m initial investment forming part of the local industrial strategy (see below) to boost the region’s economy. West Midland’s mayor, former Waitrose CEO, Andy Street, lauded the achievement and also launched a £5m ‘Beat the Bots’ fund which will help to retrain workers whose jobs are at risk from becoming automated. Dudley and Stoke-on-Trent were identified as two of the ten UK towns where most jobs are at risk according to the Centre for Social Justice. The funding comes from the government’s National Retraining Scheme, as part of the West Midlands Combined Authority’s Skills Deal.

The West Midlands has become the first region to agree a local industrial strategy with the government. The 83 page document was developed in collaboration with more than 350 businesses and was signed off by Business Secretary, Greg Clark. The strategy builds on previously agreed city deals, devolution deals and strategic economic plans. As well as battery industrialisation, other priorities in the document include data-driven healthcare innovation and creative content. The country’s first £20m Future Mobility Zone, between Birmingham, Solihull and Coventry, will host the testing of new technologies aimed at increasing journey predictability. Also £50m has been earmarked for 5G trials across region.

The plan highlights how the local economy will be boosted by the opening of HS2 and how the region is improving its international profile – with Coventry to become the UK’s City of Culture in 2021 and Birmingham holding the Commonwealth Games in 2022. The strategy also outlines plans for the West Midlands to partner with local specialist manufacturers and R&D centres to help create new markets and foreign direct investment opportunities. Growth in the West Midlands is 1.2% in the year to March 2019 with the UK growth rate for the same period at 1.5% and London’s growth rate at 2.7%.

West Midland’s sports developments, Primark bucks the trend and informal economic development on the Welsh/Shropshire border

Reading Time: 4 minutesUnemployment in the WM rose by 7,000 to 153,000 between December and February; a rise of 0.2% to 5.2% – the second highest 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 rate stands at 3.9%. In the UK average earnings grew by 3.5% or by 1.6% after inflation.

WM average property prices increased by 0.4% to £196,152 during the month which pushed the annual growth rate up to 2.9% – the second highest in England. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

April snow disrupting traffic in Shropshire and an earthquake near Market Drayton may have caused negligible economic damage to the WM economy but days of ‘go slow’ driving by Birmingham black cab drivers may have had more of an impact. Motorists with high-polluting cars will have to pay £8 to enter the city centre after the government approved the city’s clean air zone (CAZ) plan but taxi drivers claim the £5,000 offered by the council to upgrade their cabs is not enough.

The Centre for Cities research group suggests that Telford will be one of the worst hit areas in the UK if the country leaves the EU without a trade deal; 59% of goods exported by businesses in Telford went to the EU in 2017.

Brexit was certainly blamed by Jaguar Land Rover as it shut down production for a week because of uncertainties around the issue. Staff at Castle Bromwich, Solihull and Wolverhampton were affected; the shutdown is in addition to a scheduled closure the following week for Easter. The firm has also announced it will build its next-generation Land Rover Defender 4×4 in Slovakia rather than the UK although the new model is UK designed and engineered and some of its new engines will be built in Wolverhampton. The Defender was always likely to be built in Slovakia after the company spent £1bn on a new plant which opened in October 2018.

A series of unwelcome announcements during the month began when 200-year-old pottery manufacturer, Dudson, in Stoke-on-Trent, went into administration. The company employed 390 people of which only 72 staff will be retained to help with the wind down. Last month, another well known Stoke-on-Trent pottery firm, Wedgwood, announced plans to cut its workforce by about a third. Administrators have also been appointed to Dudley based Meridian Metal Trading which employs 170 people at service and sales offices across England and Wales. The firm processes steel sheets and coils but there are hopes that it can be sold as a going concern with no redundancies.

Barclays has announced a consolidation of some of its operations with about 350 staff at sites in Coventry and Birmingham affected. The bank will relocate the jobs to Glasgow, Greater Manchester and Northampton, but overall headcount could drop by 50.

On retail, fashion chain LK Bennett has been bought out of administration but 15 of the retailer’s stores are not included in the deal, including a Birmingham branch. Wolverhampton shoppers were left bemused when Debenhams new owners announced that the city’s store – which only opened in 2017 – will close.

The Heart of Wales railway has some of the most breathtaking scenery in Britain and now walkers can enjoy one of the UK’s longest fully-waymarked footpaths, loosely following the line, from Shropshire to Carmarthenshire. The last stage of the 141-mile trail has opened with the predicted rise in visitor numbers expected to boost the local economy. The largely crowd funded/volunteer project demonstrates what can be achieved without the involvement of more formalised economic development. There was more positive news on Shropshire tourism; the RAF museum at Cosford – celebrating the 100th anniversary of the RAF – saw visitor numbers increase by a whopping 20% last year to 444,965.

Notable regional development projects this month include the world’s biggest Primark opening in Birmingham. Covering c15,000 sqm over five floors – with a Disney-themed cafe plus two other eateries, a barber shop and beauty studio – the new store is thought to have cost c£70m; 500 new jobs have been created.

A new £60m aquatic centre for the Commonwealth Games has been approved; work on the development on Londonderry Playing Fields, Smethwick, will begin later this year. Areas around the Alexander Stadium could include running trails and a promenade as part of the redevelopment of Perry Park; more than £70m will be invested in upgrading the stadium which will host the athletics and opening and closing ceremonies of the 2022 games. Although Birmingham will host the Games, track cycling events will be held 130 miles away at the Lea Valley Velodrome in London as neither Birmingham nor the WM region has a velodrome venue; a 1,000-seater velodrome would cost c£20m.

A new £50m sports and gym facility has opened in Coventry. The University of Warwick’s Sport and Wellness Hub has two multi-purpose sports halls, a 230-station gym, indoor climbing centre and a 25m pool. The new Hub will be a venue for the 2019 European Corporate Games, expected to attract up to 7,000 athletes over four days. The facilities are open to students, staff and the general public. Also the West Midlands Combined Authority (WMCA) will provide £31.6m to help the city prepare to host the UK City of Culture in 2021. The remaining funding for the £44.83m project is being raised locally.

On transport, regional rail operator West Midlands Trains will run electric trains services on the Chase Line from next month. Network Rail started a £100m scheme in 2013 to electrify the 15 miles of track between Walsall and Rugeley Trent Valley.

Storm Gareth has an impact, automation a risk to the WM and the end of two regional icons

Reading Time: 4 minutesUnemployment in West Midlands remained unchanged at 149,000 between November and January; the rate of 5.1% was the second worst in the UK. 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 West Midlands increased to £579 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.

West Midlands average property prices fell by 2.1% to £195,399 during the month which trimmed the annual growth rate to 4.0%. In comparison UK prices dropped by 0.8% during March which cut the annual growth rate to 1.7%. The West Midlands market was also slower with the latest figures to September 2018 showing volumes down by 2.1%.

It is likely that disruption caused by Storm Gareth will – like most western parts of the UK – have some impact on the economic performance of the region during March especially those parts affected by flooding along the River Severn. What is more certain to affect the regional economy – according to think tank the Centre for Social Justice – is automation. In its study, Dudley and Stoke-on-Trent were identified as two of the ten UK towns where most jobs are at risk. If automation does render these towns’ economic dinosaurs, then more visits by Dippy the Diplodocus to Birmingham Museum and Art Gallery – which boosted visitors numbers by more than a third last year to 832,000 – will be needed.

March saw the end of two regional icons with the passing of Lord Bhattacharyya and the end of the Morgan family’s majority ownership of their all wood car firm. Lord Bhattacharyya, the founder of Warwick Manufacturing Group, was a key figure in attracting inward investment to the region and a pioneer on how universities should work with industry. Lord Bhattacharyya came to Birmingham from Bangladesh in the 1960s and became an authority on industrial policy and an adviser to successive Prime Ministers; Gordon Brown was among those who paid tribute to him at a special service of remembrance held at Coventry Cathedral. Morgan is to be sold to Italian venture capitalist firm InvestIndustrial, which will take a majority stake. The Morgan family, which has owned the company for 110 years, will retain a minority shareholding along with the management team and the 190 employees. Last year the firm had revenues of £33.8m and a profit of £3.2m.

A slew of regional job losses began when insurance firm Ageas announced the closure of its Stoke-on-Trent office with about 350 staff affected. The call centre in Trentham Lakes will close in June 2020 as a result of more customers buying their policies online. The firm said increased business efficiency created by investing in technology played a part in the decision – a form of automation. Also Stoke-on-Trent contractor George Birchall Services – which specialised in facilities management and building maintenance – went into administration with the loss of about 400 jobs. Added to this Tata Steel cut 60 jobs at its base in Wednesfield and Hereford packaging firm Vision Gelpack was closed by administrators with the loss of 50 jobs. A key bright spot, however, was the 36 quality jobs created at a £50m facility for creating cleaner mobility which opened in Coventry at the university’s Technology Park. The Centre for Advanced Low-Carbon Propulsion Systems (C-ALPS), collaboration between Coventry University and engineering firm FEV Group, will support the development of the next generation of electric, hybrid and combustion engines.

Former Waitrose CEO turned West Midlands mayor Andy Street’s plans for £10bn worth of housing, regeneration, commercial and infrastructure development could be underway as plans for the Brewers Yard scheme have been unveiled. The ten acre brown-field site next to the railway station and the University of Wolverhampton’s Springfield Campus would be used for 1,100 city houses and apartments and 60,000 sq ft of new retail and commercial space at a price tag of £250m. The mayor highlighted the Region’s potential to international investors at the MIPIM property marketplace in Cannes. On a smaller scale, Stoke-on-Trent College will invest £1.4m in a new performing arts centre at its Cauldon Campus; the current centre in Burslem will shut.

On regional infrastructure the £17.5m scheme to widen the A500 in Staffordshire has started; over the next 18 months Highways England will add a third lane in both directions between Porthill and Wolstanton. Also the Department of Transport has agreed to £54m of funding towards the Shrewsbury north-west relief road which will be operational after 2022. The remaining £17m cost of the project will be council funded. Work on Hereford’s southern link road will begin later this year after HMG approved a series of compulsory purchase orders to buy the land needed to build it. The route will cut congestion on existing routes and provide access to the Hereford Enterprise Zone.

West Midland transport links will be strengthened by an upgrade of Birmingham’s Moor Street railway station. Its concourse will be expanded and two new platforms created allowing extra services to and from the East Midlands, Hereford, Worcester and the South West. Kidderminster rail services to Birmingham will increase from April as West Midlands Railway will operate with three trains an hour throughout the day and additional evening services. Coventry’s light rail project – which hopes to eventually connect the train station and the high speed rail network at a new HS2 interchange station near the NEC – has moved ahead with the unveiling of designs by Warwick University. The £14.5m project is funded by the West Midlands Combined Authority Devolution Deal and Coventry and Warwickshire LEP Growth Fund. In the air, Air India has suspended its Birmingham Airport flights to New Delhi and Amritsar. The change affecting four regular services is a result of closures to Pakistan airspace following air strikes by the Indian military.