This post makes three main points:

  • Compared with the North and other regions no one is putting the Case for the West Midlands
  • In a brand new policy environment, there is “no going back” to previous structures and policies. The West Midlands needs to adapt to new funding structures
  • The West Midlands needs a coherent policy approach without costly new structures but through more effective and efficient use of existing resources.

Putting the West Midlands Case

The steady flow of policy documents and projections from the West Midlands Regional Observatory ceased in November 2010.   Despite excellent subregional examples such as the “Black Country Education and Skills Barometer” in October 2011 and leading online policy analysis down to LSOA level by the Coventry Partnership, Marketing Birmingham and others are not yet resourced to fill this gap.

No one is putting “The Case for the West Midlands”.

A good starting point might be the wider acceptance of Birmingham as the regional capital or Core City and more recognition that the advocacy of many local projects is more effective when set against a West Midlands regional background.

But, as Michael Caine might say, “Not a lot of people know this”.

Things are different elsewhere. Across the North West, North East and Yorkshire and Humberside, they have succeeded in blurring their often significant differences to put “The Case for the North”.

The Northern Way

In the 1980s traditional rivalries between Manchester and Liverpool were so fierce that there was a Government Office in both. Today, through the Association of Greater Manchester Authorities, Manchester is viewed benevolently by central Government as a powerful City Region.

Across the Pennines the North East has long enjoyed a blend of solidarity and cooperation second only to Scotland. That was why John Prescott’s first elected Regional Assembly was trialled in the North East.

Despite local and regional rivalries, especially since 2004 through the Northern Way, cities as far apart as Manchester, Liverpool, Newcastle, Leeds and Sheffield recognised that the North West, North East, and Yorkshire Humberside would earn more respect if they spoke with one voice.

Without RDA funding the Northern Way ceased on March 31 2011. But the Case for the North continues to be made – through the Northern Regeneration Summit, North of England Education  Conference and Northern Housing Consortium. Many individual organisations, such as the Chartered Institute for Public Relations, though headquartered in London, hold a Northern Conference or have a Northern Office.

To fill the gap left by Northern Way, the Institute for Public Policy Research North is now collecting evidence for its Northern Economic Futures Commission.

The effectiveness of the Northern Way was endorsed in a thoughtful and not uncritical “Evaluation of The Northern Way 2008-2011” in April 2011 by SQW. In Capabilities, ‘Strengths and Weakness’, SQW says on p152:

“Fundamental and cutting across all of these strengths, a major factor in the success of the initiative in the 2008-2011 period was that it became more focused on a smaller set of issues that were genuinely pan regional. This meant that it was filling a genuine strategic gap on behalf of northern partners. In doing this, it also clarified its role to be on more fundamentally about setting and influencing the agenda rather than ‘doing delivery'”.

Michael Ward in the Smith Institute’s “Rebalancing the Economy: Prospects for the North” in March 2011 in its Executive Summary on page 6 now advocates that Northern local authorities and others should now go further:

  • The report recommends that the three Northern regions should take the initiative with business, universities, and the community and voluntary sector in establishing a new, strategic advocacy body for the North – ‘a Council of the North’ – to argue the North’s case in Westminster and Brussels….
  • Local planning authorities in the three Northern regions should work together, initially on a non statutory basis, to develop a strategic plan for the North, covering key housing and employment developments, infrastructure and skills (similar to the London Plan).

The Joseph Rowntree Foundation’s “Rebalancing Local Economies” October 2010 – funded by the Northern Way – compares very different areas, ranging from Leeds through Liverpool Speke and Croxteth to the Tees Valley. One of its main conclusions is that while economic growth plays a crucial role in tackling neighbourhood deprivation, these benefits do not automatically trickle down to all neighbourhoods.

Following the establishment of the Institute for Public Policy Research office in Newcastle, the most important feature in all these reports is that they continue to reflect IPPR North, Joseph Rowntree, the Smith Institute and others demonstrating an ongoing convergence of public authorities to proclaim a united message for the North.

The Contrast of the West Midlands

In contrast, the West Midlands Leaders’ Board Statement of Intent and “Local Economic Assessments in the West Midlands” by Rocket Science in February 2010, despite their contemporary relevance, today sound like wistful longing for a bygone era. Though West Midlands Councils continues, as an umbrella body this is not resourced for an overall strategic or regionally representative role.  The closest approximation to a regional strategy body is the Local Management  SubCommittee for EU Funds.

The West Midlands struggles to find a collective voice.  It hasn’t even been possible to produce a harmonious let alone unanimous West Midlands response to High Speed 2.  Now that an astute new Transport Minister Justine Greening seeks ways for HS2 to become more politically acceptable, perhaps the West Midlands should too?

Michael Ward’s “Rebalancing the Economy: Prospects for the North ” in March 2011 on page 32 provides an effective summary of changes in Government’s policy following the Department of Business, Innovation and Skills October 2010 White Paper: “Local Growth: Realising Every Place’s Potential”: 

  • changing the spatial level at which activity takes place, from the region to the functional economic market area
  • withdrawing most of the money;
  • institutional change – abolishing the RDAs and setting up the LEPs; and
  • stopping some things and centralising others.

The Localism Act. Regional Growth Fund, Growing Places Fund, New Homes Bonus, Local Enterprise Partnerships and Core Cities all represent the Government’s chosen policy instruments and initiatives with which the collective North is more effectively coming to terms.

Resilience to Policy Changes

Regional economic resilience matters. But resilience in responding to fundamental Government shifts in policy matters even more.

Previous funding levels for regeneration will never be restored.  The House of Commons Communities and Local Government Select Committee Report on Regeneration  shows that this Government takes a radically different approach.

In its Report on Wednesday 19 October 2011 on “Resources” the Committee on page 12 said:

“In December 2010, DCLG published an economics paper commissioned by the previous Government, “Valuing the Benefits of Regeneration” in December 2010.  That paper estimated spending on “core” regeneration programmes by DCLG, the Homes and Communities Agency and Regional Development Agencies to be £11.189bn in 2009/2010. At our request, DCLG provided us with further financial data which showed that this spending fell to £7.926bn in 2010/2011 (revised from £9.1bn after taking account of in-year adjustments) and is estimated to fall to £3.872bn in 2011/12.

This means a 65% reduction in regeneration spending. But it’s worse than that. The 2011/12 figure includes £2.9bn on existing programmes and only £1bn on “additional programmes – the Regional Growth Fund, the New Homes Bonus and the FirstBuy scheme”.

None of these are primarily intended as regeneration initiatives. As Lord Heseltine, Chair of the Regional Growth Fund Panel, told the Committee:

“The fact is that Regional Growth Fund is not about regeneration. We have never been told to go and regenerate any community or anything like that”.

The Government does not believe that big spending regional agencies are effective. Enterprise Minister Mark Prisk told the Northern Summit in October 2010 Enterprise Minister Mark Prisk at the Northern Summit in October 2010 :

  • “Between 1990 and 1999 – the year the RDAs were set up – Gross Value Added growth averaged 2.5% a year in the Greater South-East, and 1.9% in the remaining English regions – a gap of 0.6 percentage points,” Prisk said.
  • “Between 1999 and 2008, under the RDAs, annual GVA averaged 2.1% cent in the Greater South-East, and 1.5% in the rest of the country – also a gap of 0.6 percentage points.”

Michael Ward also recognises the limitations of RDAs on page 25 of his “Rebalancing the Economy: Prospects for the North” under “Towards a Balance Sheet for the RDA Area”, where he says.

“But the real engine of job growth in the North in the New Labour years, it has been argued, was straightforward government spending on public services – mostly health and education. The RDAs accounted for only about 1% of total public spending in their regions”.

IPPR North’s October 2011 paper “Learning from the Past” on page 3 “The Recent Economic Story of the North”, basically agrees with this:

“Despite a determined programme of work and investments made by RDAs and their part­ners, a gradual evolution of the institutional framework towards more decentralised arrange­ments, and a benign economic environment, the headline figures remained stubbornly fixed. Between 2000 and 2008, while the annual rate of growth in GVA in the northern regions was a healthy 4.6 per cent, it was still below the England and UK averages of 5.2 per cent.”

So instead of big spending regional agencies, the Government has turned to more localised initiatives, some of which are described below.

Where the New Money is Going

Regional Growth Fund

In its “Regional Growth Fund Updated Briefing” in October 2011 Northern Housing Consortium shows on page 5 how abolition of Regional Development Agencies has disproportionately affected the North:

“Spending out turn figures for 2009-2010 show that the North’s comparative disadvantage means that the Northern RDAs accounted for 43% of total English RDA spending, despite the fact that the Northern Region comprises only 29% of England’s population.

Because of this, the Northern Housing Consortium recognises the significance of Regional Growth Fund on page 2:

“We were pleased to note that almost 70% of the projects which were successful in obtaining funding in the first round (April 2011) were located in the North of England, including two bids for housing renewal and growth in Wakefield and Hull.

“Results of the second round were announced on 31st October, 2011. 119 successful bids were announced, 49 of which affected the North East, 34 the North West, and 23 affecting Yorkshire and Humber.

The Consortium RGF Briefing in October 2011 continues on page 2:

“…there is a strong case for the vast majority of the RGF to be allocated to the North, which has been disproportionately affected by the abolition of Regional Development Agencies (RDAs), the cessation of Housing Market Renewal (HMR) funding, and the higher percentage of public sector employment in the North. Over the course of this CSR period, the RGF represents the main opportunity for the North to obtain finance to address these challenges through a transition to sustainable growth”.

Though Michael Heseltine as Chair of the Regional Growth Fund Panel doesn’t see the Fund as an agent of regeneration, many in the North still see the Regional Growth Fund as their best hope.

New Homes Bonus

The Northern Housing Consortium is rightly more concerned about New Homes Bonus. In its Report on “The New Homes Bonus: Risks and Opportunities for the North” in September 2011 the Consortium says on page 2:

“We found no relationship between New Homes Bonus payments and levels of deprivation. However, in the longer-term we are very concerned about the large net losses in funding many local authorities in the North will suffer from, once the majority of the Bonus is funded through top-slicing Formula Grant allocations. That is why the Consortium is calling for the Bonus to be fully-funded in future Comprehensive Spending Review rounds.”

In February 2011 £194mn New Homes Bonus was projected for 2011/2012 with £1.2bn over the next four years.  More than half of the first allocation went to Councils in London, the South East and East of England with £100mn.  Councils in the North East, North West and Yorkshire and Humberside received 20% of the total.

But depending on net additions to housing stock, in 2014/2015 NHB could be more than £1bn – almost the originally projected total for the whole scheme. Much will depend on how much represents a transfer from Funding Formula Grants and how much is fully funded.

New Homes Bonus is not large enough to provide regional rebalancing. But, matched with other funding, it might form an element of a West Midlands strategy.

The Centre for Cities “Room for Improvement: Creating the Financial Incentives Needed for Economic Growth” July 2011) analysing the First Round of New Homes Bonus 2011/2012 shows the significant position of the West Midlands. The Report on page 39 says:

“Our modelling suggests that the strongest supply response will be in London (a 21% increase over the baseline). This can be attributed to the relatively steep spending cuts experienced by London Boroughs and that, with a high affordability ratio across the capital, most authorities are not constrained by a lack of demand. The second strongest supply response is in the West Midlands (10%).

So despite Birmingham’s overall loss, collective use of New Homes Bonus may be able to contribute to a West Midlands strategy.

Growing Places Fund

The Growing Places Fund Prospectus in November launched a £450m invitation for LEPs to bid for infrastructure funding for promote economic growth, jobs and homes. The fund is distributed indicatively by formula to LEP areas, based on a 50% weighting given to resident population, and 50% given to ‘Employed Earnings’ – criteria benefit which benefit London and the Greater South East.

The North in total has only received 30%. The South East has received 20%. The ‘London mega-region’ has received 40%.

The Black Country received £9.6mn, Greater Birmingham and Solihull £14.9mn and Coventry and Warwickshire £8.5mn. The North East received £16.7mn . Greater Manchester received £24.7mn

But Growing Places success as a revolving fund will depend on LEPs’ ability to lever additional private and other resources.

Possibilities with the New Money

While Regional Growth Fund, New Homes Bonus, Growing Places Fund and future announcements on Retention of Business Rates and Core City Deals may form ingredients of a regional strategy, none of these heralds a return to a previous scale of regional development spending.

But they do show a need for strategic thinking, collective initiative and a return to a more informal collective approach which has benefited the region in the past.

Strategic Added Value for the West Midlands

The West Midlands lacks the Strategic Added Value and strategic thinking of Advantage West Midlands.

In “Towards a Resilient Region: Policy Activism and Peripheral Region Development” by the Spatial Economics Research in September 2010, economists at the University of Newcastle make a relevant point on page 9:

“Whilst much attention has focused on the role of political leadership at the time of crisis, resilience thinking also looks to the role of intelligent institutional leadership in framing and articulating the nature of the event, crisis or slow-burn process and constructing a discursive narrative of strategic adaptation or adaptability able to enrol local and regional actors”

This research shows how One NorthEast identified Renewable Energy as an emerging technology, with the creation of the New and Renewable Energy Centre. Based on development of internationally recognised research and development, testing and commercialisation infrastructures, this offered the prospect of 3000 jobs in the supply chain. One NorthEast ploughed significant resources into NaREC.

But Advantage West Midlands has already overseen similar investment in the West Midlands. There is no doubt that regionally strategic projects, such as the Premium Automotive Research and Development Programme at Warwick University and the strategic regeneration of Longbridge, could be developed to play the same role.

The March 2009 PWC Evaluation of Regional Development Agencies “Impact of RDA Spending” published by BIS under “Performance against Objectives” referring to additional GVA, makes a similar point on page ix of the Executive Summary:

“….Moreover, such an assessment overlooks the wider economic impacts of RDAs’ activities which are not captured in the estimated impact on GVA. These include the social and environmental impacts and effects of RDAs’ strategic role and wider influence other regional and national stakeholders (SAV), neither of which has been valued as part of this analysis”

It’s not regionally significant resources but regionally strategic thinking which matters.

A start has already been made in some local areas. Look at the presentation from Shropshire Council on Monday 21 November 2011 on “Delivering Local Priorities Through Partnership Working” using Community Infrastructure Levy and Section 106.

Though all this is less than regional, it’s a good example of the new thinking needed. Based on this a West Midlands LEP might use Community Infrastructure Levy, New Homes Bonus or even TIF to fund the Growing Places Fund.

The Heart of the West Midlands Case

At the heart of any West Midlands’ case is the region’s more than 50% dependency on lower value added private sector activities such as some business services, wholesale and retail, hotels and catering and cultural, recreational activities.

There is severe under representation in higher value added business and professional services, environmental technologies, digital media and medical technologies is the key to improving economic performance and generating more highly skilled jobs.

The West Midlands case might be based on upskilling and diversification strategies identified for the regional by Cambridge Econometrics for Advantage West Midlands and others in 2009 and 2010. These included:

  • The need for higher skills
  • The need to strengthen our industrial structure
  • The need to improve regional gross value added

In  the Regional Observatory’s “The West Midlands Economy Post Recession: Key Issues and Challenges” June 2010, on page 24 under Cambridge Econometrics ‘diversification’ scenario there would be an increase of more than 200,000 in regional employment.  High value added business & professional services could create than 100,000 net new jobs. ICT could create 30,000 net new jobs.

Surely HS2, Regional Growth Fund, New Homes Bonus, Growing Places Fund, the Deal for Core Cities and other proposed regional improvements fit somewhere into all of this?

Though the numbers may have changed since the Cambridge Econometrics Report, the basic strength of the case hasn’t.

Informal Collaboration 

This is not a call for statutory or semi statutory structures.

One of the most effective examples of West Midlands regional cooperation is sometimes overlooked. The Post 1999 Group, convened informally by Jon Bloomfield at Birmingham City Council, effectively cut across sub regional boundaries and defined the parameters of 2000 to 2006 European Programmes – with substantial Objective 2 rural coverage in Herefordshire, Shropshire and Worcestershire.

The Group’s true legacy is that with Advantage West Midlands match funding, many of today’s regionally significant projects were devised and delivered.

A move in this direction began on Monday 05 December, when West Midlands European Office convened a meeting to decipher how the region might lever further European funding under proposed 2014 to 2020 Structural Funds. West Midlands Universities were invited to draw up a list of possible projects.

Despite the cuts, the West Midlands still has some excellent local authority economic development departments and an enviable diversity of further and higher education projects. But no one is bringing them together, even on an informal basis like the Post 1999 Group.

A start might be made based on Jaguar LandRover’s newfound investment from Tata. JLR is now a £10bn turnover company, which employs more than 21,000, mostly in the West Midlands. If the West Midlands can’t turn that into one element of a regional strategy, it hardly deserves to be called a region.