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Greater Birmingham’s economic plan – the best of times, the worst of times

Greater Birmingham’s economic plan – the best of times, the worst of times

🕔29.Jul 2016

Council and business leaders have published the latest Strategic Economic Plan – A Greater Birmingham For A Greater Britain – setting out a bold strategy to turn Greater Birmingham into a “global elite”.  Chief blogger Paul Dale examines the latest in a long line of plans for growth.

The story of Greater Birmingham’s economic successes and failures really is Dickens for the 21st century – the best of times, the worst of times, the season of light, the season of darkness.

For all of the undeniable success stories – the ‘game changing’ arrival of HS2, Birmingham’s reawakening as the most entrepreneurial city outside of London, foreign direct investment flooding in at an unprecedented rate, a fast-growing life sciences sector, a boom in digital industries – the failings that have held the region back for decades are as ingrained as ever and show little sign of being reversed.

Productivity and skills, or more accurately the poor performance of both, continues to stand in the way of well-meant promises to make sure the fruits of economic growth and opportunities to get on in life reach out to all citizens of the West Midlands, wherever they live or come from.

Six years ago, the greater Birmingham and Solihull LEP set challenging targets to increase GVA, the Government’s preferred measure of the value of goods and services produced in an area, to at least the national average and to exceed the Core City average for NVQ3+ skills levels by 2020.

There is not the slightest chance of either target being met, as the SEP candidly admits.

The gap in GVA between Greater Birmingham and the national average has actually increased since 2010 by £443 per person, while the number of people without NVQ3+ skills has also increased, by half a per cent.

For sure, much of the West Midlands is experiencing an economic renaissance. From 2009 to 2014, Greater Birmingham saw a 16.3 per cent growth in its economy, the highest rate of growth of any UK city region outside London. Private sector job creation has risen by 85,200 since 2010, outperforming the national average.

And yet there are many parts of Birmingham and north Solihull where unemployment has persistently been above six per cent, way over the UK average.

This means that for all of the jobs that are being created and will be created around HS2 in Birmingham city centre and Solihull and the push towards life sciences research, the pool of talent required to fill these jobs will exclude tens of thousands of people who simply will not have the skills required for the type of vacancies on offer.

The draft 2016-2030 SEP has redefined some of the targets to make them more realistic, although even the less demanding promises will still be hard to achieve. The promise to increase GVA to at last the national average has been replaced by a target to hit the Core Cities average, while a pledge to increase working age qualification levels to the national average has been pushed out to 2030.

To be fair to GBSLEP, it is the leading LEP out of all of the Core Cities LEP for increasing GVA and workplace skills, but lagging way behind the national average.

The draft SEP sets out a vision to turn Greater Birmingham into “a global elite: a truly global city by 2030”, and vice chair Steve Hollis paints an optimistic picture:

“We have made remarkable progress together over the past three years. There is a real buzz about Greater Birmingham & Solihull. The transformation in our economy is clear – we are top of the pile for inward investment, business start-ups and job creation. And we believe our track record of delivery means that we have earned the right to be bold.

“HS2 presents a once-in-a-generation chance to deliver growth on an unprecedented scale and sets Greater Birmingham apart as genuinely unique.

“Nowhere else in Europe can boast of two brand new high speed rail station sites within touching distance of a major airport, at the heart of the strategic road and rail networks and with a series of nationally significant economic assets already in place. To say this is a game changer is an understatement.

“Our advanced manufacturing industry is already the envy of the world. And I am particularly excited about our life sciences opportunity. Our Life Sciences Commission has identified huge potential for Greater Birmingham to become a 21st century life sciences hub, leveraging major investment from global pharma and driving growth while accelerating patient access to new treatments.”

Updated targets set out in the LEP, described as challenging but realistic, are:

  • To create 250,000 private sector jobs by 2030 and be the leading Core City LEP area for private sector job creation;
  • To grow economic output (‘GVA’) by £29 billion by 2030;
  • To decrease unemployment to the national average by 2020 and achieve the lowest unemployment rate amongst the Core City LEP areas by 2030;
  • To be the leading Core City LEP area for GVA per head by 2030; and
  • To increase the percentage of our working-age population qualified to NVQ3+ to the national average by 2030.
  • To increase productivity (GVA per hour worked) to the national average by 2030.

The plan focuses on developing Greater Birmingham’s competitiveness for private sector investment, including foreign direct investment (FDI), and the competitiveness of its businesses, supply chains and workforce.

It seeks to build on the region’s competitive strengths in high value manufacturing and advanced engineering particularly for transport, business, professional and financial services, digital and creative, energy, environment and infrastructure, life sciences and food and drink processing and production.

The SEP seeks to capture opportunities being created by HS2 which will “bring Birmingham city centre within 49 minutes of central London and make Birmingham Airport – the UK’s seventh busiest – the UK’s first and only high-speed rail connected airport”.

The document does not hold back on the big picture – “our vision is to be a top global city region that harnesses its traditions of creativity, innovation and design, its diversity and youthfulness, its global connections and technology and sector leadership, its world-class cultural assets and quality of life, to inspire, develop, retain and attract talent, for a smarter, more sustainable and more prosperous future” – but at the same time recognises an urgent need to raise the quality of life for all of the LEP’s population.

Successful delivery of this vision, according to the draft SEP, relies on:

  • Increasing business and workforce productivity and competitiveness – particularly by raising skills levels and stimulating demand-led innovation.
  • Increasing private sector investment, including overseas investment.
  • Increasing business survival and growth.
  • Increasing exports particularly amongst Small and Medium Sized Enterprises.
  • Reducing unemployment – particularly focusing on tackling the persistent high rates of unemployment that exist in parts of Birmingham and North Solihull.

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