We must build on our competitive regional advantages

Building on the strengths of the West Midlands

“We are enjoying something of a revival in the West Midlands.  The stats for the last 3 years show that productivity in the West Midlands – measured by GVA per head – has increased by 6.8%, nearly three times higher than the national average which is 2.4%. This is a source of pride because at no point in the last 50 years could the region have been said to even match the national figures. We also have strong export figures and the highest number of start-ups outside of London.

“So what do we learn from this revival? In the West Midlands we have consistently followed a mini industrial strategy for the last six years. Credit must go to the three Local Enterprise Partnerships in the West Midlands which all consistently followed their strategic economic plans since 2011. We have now combined them into one SEP (Strategic Economic Plan) for the West Midlands Combined Authority area. The way we have done it is to follow the clusters where we have a genuine international advantage. In 2011 we only had one cluster that was of international leadership and that was automotives, and possibly aerospace. We looked to where we could build clusters by identifying where we had niche that had potential so we concentrated on advanced manufacturing, high-speed rail, life sciences and particularly precision medicine, and also on our advantage in professional services.

“Our Science and Innovation Audit, which was conducted independently, confirmed that the West Midlands does have these cluster advantages. The Science and Innovation Audit also said that the driving force of our economic strategy is the anchor businesses, for example like Jaguar Land Rover, and our anchor institutions like our universities. We have put our universities at the heart of our strategy.

“The great news for the West Midlands from the Government’s new White Paper is that it recognises that we have real leadership in automotives – particular in autonomous and electric vehicles, which is one of the four new Grand Challenge areas. The White Paper and the Budget show how the government is backing those areas of strength. The fact that we will be trialling autonomous vehicles on the streets of Coventry, Solihull and Birmingham possibly within two years and at scale is clear evidence of that.”

“The industrial strategy needs to focus on finding competitive niches for everyone. We are in an international race and we have to concentrate on backing our strongest places and not dilute them, and in the case of the West Midlands ensure they can complete with places like Boston, Stuttgart and Detroit.”

Devolution and skills

“The white paper talks about devolution a lot, but there is one missing aspect which is the devolution of skills. It is the biggest issue at every gathering of businesses we have. Businesses are enjoying vibrant growth but they cannot fill vacancies with the right people, and at the same time we’ve still got unemployment rates in areas of Birmingham well above the national average. We’ve got some useful moves within our devolution deal – the re-start of the National Careers Services in the West Midlands for example, but frankly we have failed to persuade the government that we need to move to a dramatic regional approach to skills. The Department for Education must be brought right into the heart of the industrial strategy.

“Skills was the most disappointing part of the Budget and we are not stepping up in that important area. I am personally determined in my mayoralty of the West Midlands that we address this issue. What we need is cash to invest in skills in the growing sectors and we need to change the Key Performance Indicators of our skills providers, for example, is it right that further education providers are measured by Ofsted on their Maths and English results rather than on the employability of learners for the new sectors.”

Infrastructure

“On infrastructure, there is a real challenge to justify infrastructure investment. Last week we secured £250 million investment in transport in the West Midlands and 40% of the cost for the new railway line is being locally met though land value capture. It is far harder to make those numbers add up in economies like Dudley, for example, than in Battersea. That is currently what the government is looking to do but this needs to change as it is not a realistic prospect that the same approach is taken everywhere. We can’t match London’s investment numbers.”

Regulation

“The Industrial Strategy Commission and the Government’s White Paper were relatively quiet on the role of government to provide the regulatory support to the new industries. Investment in autonomous vehicle technologies is brilliant, but there are questions about what the insurance market will look like, what is the data management going to be. There is an important role for Government in bringing forward some of those regulatory pieces as well.”

Andy Street is Mayor of the West Midlands. He can be followed on Twitter @andy4wm.