Memorandum submitted by West Midlands
Business Council
The West Midlands Business Council brings together
over 20 mainly business representative organisations to speak
with one voice on the key business issues across the West Midlands
region, when appropriate. Further information regarding the West
Midlands Business Council can be found in Annex A.
The West Midlands Business Council report, Making
It in the Midlands, is also attached with this report.
REGIONAL DEVELOPMENT
AGENCY MODEL
The business community across the West Midlands
region supports the concept of Regional Development Agencies.
The model has proved to be effective amongst other major international
trading partners in ensuring there is business growth.
We see the concept of Regional Development Agencies
from a purely business perspective. The West Midlands is largely
a homogenous travel to work area. Statistics provided by the West
Midlands Regional Observatory and Centro—the West Midlands
conurbation passenger transport executive—demonstrate that
the vast majority of the administrative area of the West Midlands
region has strong and established travel to work patterns.
This is one of the clear economic indications
of a de facto regional economy being in place. In addition, statistics
provided by a range of bodies, such as UK Trade and Investment
as well as the West Midlands Regional Observatory, demonstrates
clear commonality of economic interests across the region—such
as agriculture in Worcestershire and Herefordshire, for instance,
with urban markets in the West Midlands conurbation.
We therefore consider that a Government agency
charged with developing the regional economy has a basis in commercial
reality and we can therefore see the need and necessity for such
a model.
Over recent decades, while the regional economy
has continued to operate in response to market demands, the decline
in traditional manufacturing industry has led to the need for
an economic stimulus to exist to jump start the regional economy.
One of the outcomes from the decline of mass production heavy
manufacturing is that the West Midlands region is one of the worst
performing regions in the United Kingdom in terms of low levels
of adult attainment in skills.
In addition, the regional economy which is reliant
on effective good transport networks, has suffered from severe
shortcomings in the transport infrastructure. This has impacted
on trade flows around the West Midlands region and across to other
regions.
In addition, due to various economic and historical
factors, the West Midlands region has one of the lowest rates
of business start ups across the United Kingdom. The West Midlands
region also has one of the lowest rates of R&D investment
in the UK.
None of these issues can effectively be addressed
by central Government alone. While the policy direction of the
Government and national macro economic stability is critical to
regional economic growth, the issues outlined above requires a
regionally based solution because many of these problems, though
not all, are based on how the regional economy has developed over
the years and is not necessarily just linked to the need for national
macro economic stability.
We believe that is where the Regional Development
Agency model comes into play. Its regional focus, which must be
tied into national economic policy, is critical so that the complex
linkages between national and regional policy can be addressed.
EFFECTIVENESS OF
ADVANTAGE WEST
MIDLANDS
We believe the Regional Development Agency,
Advantage West Midlands, has played an important role in the regional
economy. The economic recovery plans that were implemented after
the demise of MG Rover is a clear example of this. As the ramifications
of that collapse showed, the impact of the collapse did not just
affect Birmingham but also the economies of Redditch and Bromsgrove,
to take just two examples.
The soft loans scheme introduced by the Regional
Development Agency following the 2007 summer floods also helped
the regional economy get back on its feet—as the independent
Pitt Report demonstrated.
However, it is in respect of capital investment
that the role of the Regional Development Agency has been seen
to be particularly effective. For instance, it would be hard to
see how the physical regeneration of north Staffordshire would
have taken place at the pace it has without the role of a body
like the Regional Development Agency.
There is no doubt that there is concern that
the direction of Government policy has led to confusion despite
the existence of RDAs. One good example is that of City Regions.
In the West Midlands region, the City Region covering the West
Midlands conurbation and Telford and a City Region covering north
Staffordshire and south Cheshire were encouraged to be established.
It remained unclear how these City Regions related
to the sub regional structures the RDA itself had established
such as the Regeneration Zone in north Staffordshire and numerous
Regeneration Zones in the conurbation and Telford city region,
alongside other geographically designed RDA led delivery vehicles.
While Government actively encouraged the establishment
of City Regions, it did not clarify how these structures relate
to the RDA. As a consequence, progress in the City Regions in
the West Midlands region has been haphazard with very little activity
in north Staffordshire and limited activity in the conurbation
and Telford city region. Business proposes that clearer guidance
is required so that clarification of roles and responsibilities
can lead to a step change in delivery of policy objectives.
This submission would not be complete if we
did not address the business support functions of the RDA. While
business had raised concerns about the earlier structure of business
support, we are pleased that a new stream lined system has now
been introduced and we hope this new structure will prove to be
effective for the long term. Such work addresses the problems
in the regional economy- which have developed due to the regional
aspects of the economic structure, as discussed earlier in this
submission.
OVERSEAS ACTIVITY
We appreciate the Committee is rightly looking
into the role of RDAs in respect of their overseas activity. We
addressed this very point in response to the recent Regional Economic
Strategy consultation. In our report, Making It in the Midlands,
which has been attached with this submission for the Committee's
consideration, we stated:
The opportunity to influence European Union
policy for the benefit of the region is important as are the links
that can be made with other European regions for potential profitable
activity with the West Midlands.
For instance, in October 2006, the West Midlands
Business Council—with the Midlands World Trade Forum—pitched
to representatives of European regions that if firms in their
areas worked with firms in the West Midlands not only could this
be good in terms of commercial collaboration but it could help
to access South Asian markets.
Another positive example of the work of the
West Midlands in Europe office was in 2005 when, further to the
MG Rover collapse, West Midlands in Europe immediately made representations
to the European Commission that led to assistance from the EU
towards the work of the MG Rover Task Force.
These examples show the merit of establishing
the West Midlands in Europe office and, with a greater focus,
it can achieve so much more for the people and businesses of the
region.
That is why we would propose that the West
Midlands in Europe office concentrate on:
— Providing tailor made information
to clients rather than general information;
— Work with representatives of other
European regions to bid for EU funding with joint collaborative
measures;
— Work with representatives of other
European regions for cross regional commercial links;
— Focus on gaining EU funding for
the region including enterprise funding for SMEs.
While the West Midlands in Europe office should
be recognised for its hard work in ensuring opportunities for
FP7 funds are widely advertised, recent research by the West Midlands
Business Council—facilitated by West Midlands in Europe—demonstrate
the difficulties for SMEs, in particular, to access these funds.
Such activity, therefore, should not be at the expense of considering
other funding routes.
We added, in respect of international regional
offices:
One way is to link these offices directly
with the business community, in particular with business representative
organisations. Many business representative organisations which
are represented in the region are also represented with international
arms overseas. Therefore links could be made with these structures
so that business representative organisations can be seen as an
added extension to these offices—promoting the region and
improving communications with the business community.
Communications with the business community
is a critical issue. While knowledge of the existence of these
offices is recognised their performance and record are not known.
To engage the business community as partners with the Agency and
others in inward investment, then this relationship could be strengthened.
Members of business representative organisations
and other organisations linked to the West Midlands Business Council
could be encouraged, when on overseas visits, if they have the
time, to link up with one of the offices to promote the region.
SUB NATIONAL
REVIEW
We support the overall aim of the Sub National
Review to cut out duplication and red tape and to streamline regional
decision making and delivery. The development of tensions between
the Regional Economic Strategy and the Regional Spatial Strategy
has not helped with the development of the regional economy and
the Government is right to end such waste.
However, we are very concerned that the Sub
National Review, as currently envisaged, would reduce the business
role and therefore make it more difficult for the Regional Development
Agency to gain market confidence in its delivery mechanisms.
Regional Development Agencies are the first
to state that their business led boards are not representative
of the business community. RDAs rightly state that business members
of the RDAs Boards are there in their own right and mechanisms
still need to be put in place to ensure grassroots businesses
have a way to influence and shape policy and delivery via their
business representative organisations.
The Sub National Review, though, envisages abolishing
the only mechanism that currently exists for business, the Regional
Assemblies, with nothing put in its place. At the same time, the
Sub National Review states that a new tax would be imposed on
business—the Business Rate Supplement. Naturally, this has
led to many businesses to complain they will now face taxation
without representation.
We welcome the fact that Advantage West Midlands
has come to the conclusion that it needs to find a solution to
this matter and we would be happy to work with the Committee to
ensure business is at the heart of regional economic development
decision making and delivery. Otherwise, despite the best intentions
of the Government, business confidence could be harmed rather
than helped by these changes.
MEASURING THE
RDAS
In respect of the best means to measure performance
of RDAs we have made our views known on this issue in our report,
Making It in the Midlands.
We stated:
We support the work of the West Midlands Regional
Observatory to develop economic modelling to measure and assess
future economic trends for the region and ensure the strategy
develops to address the changing dynamics of the economy.
The work of the Observatory is fundamental
for the effective implementation of the Regional Economic Strategy
with the need for regular impact assessments. We would strongly
propose that the Agency uses to the full these tools for the good
of the region.
This modelling work is now in place and is based,
to some extent, to the economic modelling which is guiding the
work of the Northern Ireland Executive.
Such work is fundamental if we are to avoid
artificial target setting that takes little or no account of regional
economic trends and developments.
CONCLUSION
In conclusion, we believe the model of Regional
Development Agencies is required. While business has its own views
on how to develop upon the work of RDAs, in terms of the basic
necessity of RDAs, we believe the case has been proven.
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