Comment
Economic Recovery Plans: Time to reset and recharge the West Midlands economy
Given the severe disruption caused by the Covid-19 crisis of the last few months, the focus of the West Midlands region, and its civic leaders, has rightly been on the health, safety, and welfare of its residents during the ongoing pandemic.
However, as Government and local authorities continue to grapple with the ‘new normal’, a number of recovery plans and strategies are emerging within the region, each with the aim of plotting a resilient path out from the current crisis.
The most significant of these is ‘Recharging the West Midlands’, led by the West Midlands Combined Authority (WMCA), together with the West Midlands Growth Company, the region’s three LEPs, and with the support of each of the relevant Local Authorities.
Recharging the West Midlands
The document is in effect a case for investment from Government. It compiles a range of ‘asks’ for funding to restart the economy and was produced ahead of the Summer Statement in July. It sets out a range of positive measures including those involving short term protective initiatives, as well as various others relating to targeted investment in infrastructure, and longer term aspirations for a green and inclusive recovery.
Cumulatively these asks amount to a total case for £3.2bn of investment, to be spent over the next three years, along with the safeguarding of over 135,000 jobs.
Against the context of record national Government spending in tackling the pandemic, and given the finite nature of public finance, the region will be hoping to receive its fair share of any central funding.
However, while there have been some positive signs over recent weeks that Government is prepared to answer the call for funding in the West Midlands, such as the £10.8m provided for the Health Innovation Campus at Selly Oak in Birmingham, there are also a number of other competing regions across the UK seeking to catch the Government’s eye, particularly those that might expect to be on the list for ‘levelling up’.
The West Midlands Mayor, Andy Street, has been prominent in the media and on various webinars in sharing the key thinking behind the emerging plan and ‘road map’ to recovery, which very clearly builds upon the existing Local Industrial Strategy, published in May 2019, including a number of key themes that seek to capitalise on the strengths of the region’s economy.
In particular there is clear reference to the distinctive strengths of the region in respect of its ‘world leading’ automotive innovation, the scale of opportunity for green technology, and its potential for major growth relating to health innovation and life sciences. The document focuses on the case for:
- The creation of green manufacturing jobs
- Maximised job creation for local people from HS2 and other ‘unique’ opportunities
- Investment in healthcare innovation
In addition, the document highlights a number of other areas where investment from Government will provide resilience and where investment could support a sustainable recovery, including brownfield housing delivery (including the use of MMC); support for the development of a £250m battery ‘Gigafactory’ within the region; £95m to facilitate the delivery of major proposals at the HS2 Interchange site, including scope for a health innovation campus; funding for a number of ‘shovel ready’ public transport infrastructure projects (including plans to integrate ‘Very Light Rail’ as part of an improved public transport network); as well as £60m to promote delivery of a life sciences park in Birmingham.
News will no doubt begin to flow over the months ahead on the effectiveness of the investment case made, although so far this has been more of a trickle of good news, rather than the immediate wave that may have been needed. The shovels may be ready, but without new funding many projects may have a while to wait before they break ground.
Time to re-engineer how we plan for growth?
While acknowledging the fact that the West Midlands is likely to be one of the worst affected regions in the UK, there is also a sense of confidence that a green recovery can be stimulated through a range of ‘game changers’ including investment in the electrification of the automotive industry and through a commitment to enhanced investment in transport infrastructure.
Before the pandemic the West Midlands had many reasons to be cheerful about its growing economy and retaining a sense of optimism around its innovative and entrepreneurial culture will be important on the road to recovery.
The presence of specialist advanced manufacturing business, such as JLR, means that the region could begin to pioneer ground breaking new products and processes fit for green industry (particularly linked to transport and mobility) as consumer behaviours and preferences change over time.
There could also be opportunities to accommodate civil service relocations out of London; greater utilisation of universities for innovative and ‘clean’ industry, green manufacturing, digital innovation, med-tech, and life sciences.
In addition, there is scope for greater advantage to be taken from the region’s young and diverse population, as well as its existing economic assets including for example its conferencing, cultural, and leisure facilities through plans to create new forms of entertainment and cultural attraction, including innovative ways for people to come together to share their enjoyment of the arts, theatre, and other positive reasons for public gatherings.
Opportunities, as well as challenges, around infrastructure - particularly the transformative effects of HS2 – will likely create opportunities for growth. So too will climate change, decarbonisation, logistics, housing, and the aerospace industry, alongside initiatives relating to the repurposing of high streets, training, skills, and the retention of talent.
The national economic context has changed rapidly over recent months with the need to adapt to a ‘new normal’. Now is therefore the time for the region to be bold and make radical changes that will set us up for sustainable and inclusive growth for decades to come.
Times of crisis can lead to new opportunities and new forms of enterprise. The West Midlands economy has long been powered by many industrial pistons which remain in good working order. They are now ready to be re-engineered, and in many cases reinvented, to meet the needs of future generations of residents, workers, and businesses.
Rebuilding through partnerships
The West Midlands looks set to suffer a serious post-Covid economic backlash which could potentially lead to unemployment rates more than doubling.
News such as the recent announcement that John Lewis is closing their store at Grand Central in Birmingham will affect investment confidence further and it is therefore critical that the region speaks collectively, coherently, and comprehensively about the opportunities that still exist for growth and a rapid recovery. Collaborative actions will be fundamental to reversing short term impacts and the public sector will need to be empowered to ‘step up’ and support the private sector through a range of different approaches to partnership.
A source of optimism can be found from noting the relative economic health and scale of incoming investment that existed within the region prior to the lockdown. The West Midlands was enjoying an unprecedented wave of positivity and good news including: the green light being given to HS2; the pioneering 5G network going live in Birmingham; the prospect of Coventry as the UK City of Culture in 2021; hosting the Commonwealth Games in 2022; and ongoing plans for investment and delivery of new infrastructure, including the extension of the Midland Metro network.
Job growth figures within the region, relative to the rest of the UK, were also positive, supported by evidence of major international investment along with a resurging manufacturing sector. Birmingham’s changing skyline has over recent years become a physical manifestation of the boom that was being experienced by the property industry within the region. Many developers and investors had a bounce in their step before this crisis and signs were encouraging that the city’s renaissance of the last decade or so, was gathering momentum for a further period of growth.
However, it would be wrong to suggest that the region’s property markets were operating perfectly even before the current crisis. Confidence can sometimes be indicative of potential over-heating, and arguably a ‘shake-out’ in the property sector could have been coming anyway, given the record levels of competition for new investment, the development pressures resulting from this, and the increasing land values being experienced for sites in prime locations.
Inclusivity and sustainability should be at the heart of the economic recovery
It would be short sighted not to take stock of any structural changes that may be needed, or that could bring longer term benefits including consideration of any social objectives that may have been given relatively limited regard, the extent to which the benefits of investment were reaching all parts of society, and the need to give greater attention to environmental, health, and wellbeing indicators of successful investment when planning for the future of the region over decades to come.
Evidence of homelessness and the increased prevalence of rough sleeping was already a visible sign of the potential merits of a more socially inclusive approach to the sharing and spreading of investment benefits.
The declaration of climate emergencies across many local authorities, and the action plans that will inevitably follow, including the creation of car-free central urban areas, all represent a longer term shift towards a more enlightened and caring attitude towards the health and wellbeing of our communities and our planet.
These will all be factors to be taken into account in planning for recovery that should last well beyond the current restrictions on our movements and lifestyles.
Conclusion
Our view is that the region should be better placed for recovery than was the case following the last recession around a decade ago based on the baseline economic conditions, the fundamental attractiveness for investment - including in respect of existing and planned infrastructure - as well as the latent potential for further major real estate investment and regeneration, such as around the fringes of existing prime areas, on surplus urban employment land, and adjacent to new transport interchanges, connections, and planned infrastructure. Certainty is key, not least when facing into the existential challenges that will come from a post-lockdown macro-economic landscape.
We are keen to support a green, inclusive, resilient, and sustainable recovery in the West Midlands and will share our views on how this can be achieved, regardless of the level of funding from Central Government.
For further information on ‘Recharging the West Midlands’ and to find out how Turley can support you in the Midlands please contact Mat Jones.
14 September 2020