The State of Britain

WM

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

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Growth 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

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Unemployment 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

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Unemployment 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.