Memorandum from Walsall Council (WM 26)
SUMMARY
Walsall Council has consulted with a wide range
of key local partnerships to inform the submission of this call
for evidence. These include but are not exclusive to the Walsall
Regeneration Company, Black Country Enterprise and others. The
private sector has also been widely consulted upon through individual
engagement and as a result of Walsall's Business Needs Survey,
a postal survey of over 5,000 businesses situated within
the borough.
Key findings of this submission include:
— Key sectors adversely affected by the
economic situation include manufacturing and those within the
automotive supply chain
— Almost three quarters of large scale
redundancies within the borough are identified as from within
these sectors
— Investment projects are being postponed
or cancelled and companies re-prioritise to deal with the downturn
— Companies are looking for wage subsidies
to help retain key skills as they reduce working hours in order
to cut costs
— AWM application processes remain slow
and inflexible at a time when fast turnaround of applications
to enable support programmes is essential
— Business Links contracting process around
pre-engagement and new starts appears to be at odds with the needs
of the Black Country
— Issues remain around referral mechanisms
to Business Link from local partners—some businesses have
expressed dissatisfaction with this process
— Alignment of local activities with mainstream
support and BSSP is causing delay of local delivery and increased
flexibility is required in the current climate
— The impact of the West Midlands Task
Force on businesses is unclear.
1. The effect of the financial and economic
situation on businesses in the region including the effect on
different sectors such as manufacturing, service industries etc
1.1 Walsall Council and key local partners
offer a business engagement and support team that offers advice
and guidance to local businesses on a range of key issues including
investment and expansion, relocation, recruitment, workforce development
and, where appropriate, redundancy support. Tailored support solutions
are brokered in and businesses are referred to mainstream support
provision, including Business Link, where appropriate.
1.2 Walsall Council's Economic Regeneration
team has been working closely with Job Centre Plus to keep up
to date information of significant redundancy levels in the borough.
To date 3879 redundancies have been recorded since June 2008—2,888 (74.5%)
of these redundancies have been within the manufacturing and automotive
supply chain sector. Key firm closures include Wagon Automotive
(385 redundancies), Corus (200 redundancies), Niagara
La Salle (150 redundancies) and George Carter Pressings (110 redundancies).
GKN Driveline is to close its plant in Aldridge in 2010 with
the loss of an additional 325 jobs. All key local partners
has been working to provide an effective response and a joint
support visit takes place with the business support team and Job
Centre Plus to explore opportunities to support the company and
mitigate redundancies and support individual employees affected.
1.3 A number of manufacturing firms are
reporting that they are being forced to reduce working hours as
a means to cut costs but retain key skills. Companies are concerned
that excessive levels of redundancies will leave them in a weakened
position to exploit an eventual economic upturn. Many are looking
at opportunities to offer incentives or subsidise salaries, for
example through the provision of training but currently they can
only access support for the direct cost of the training. As a
result there is no incentive for employees to come in on their
free days and as they look for alternative sources of income many
companies run the risk of losing additional skills. Companies
have explained that they would be keen to see a scheme that would
enable wage subsidies for training during the downturn.
1.4 A key activity for the Councils business
support team is to support investment for resident companies looking
to expand or for businesses locating into the borough. Many of
these ongoing investment projects have now been postponed and
companies re-prioritise to deal with reduced orders. Several significant
inward investment projects that would have created hundreds of
additional jobs in Walsall have been put on hold.
2. How effective Advantage West Midlands and
initiatives such as Business Link are being in assisting businesses
in the current climate, including helping them to gain access
to funding both from Government funding streams and through the
banking system
2.1 The rate of change in terms of the current
economic climate demands responsive and flexible processes to
enable key support agencies to support businesses and projects
effectively.
2.2 The Partnership for Walsall Enterprise
& Regeneration (PoWER—Walsall Partnership's economic
pillar group) has heard how JCP, LSC, the Council and other organisations
are all adapting budgets, making it easier for clients to access
support and are participating in responses to meet changes and
demands in the economic climate. In the absence of attendance
by AWM there is the impression that the Agency are disengaged
and uncommitted at a local level. There is little evidence of
any adaptation to any of their programmes or processes to meet
the changing circumstances in the economy.
2.3 A key concern is that AWM's application
procedures remain long, drawn out and complicated and as a result
several partnership applications, specifically around ERDF, have
been dogged by delays and even changes in the rules which are
frustrating the application process. This is unfortunate in that
it has delayed potentially valuable enterprise and business support
projects from getting off the ground. Appreciating that application
processes need to remain robust, the Regional Development Agency
should be prioritising resource to ensure that projects that would
be beneficial during the economic downturn are turned around in
a timely manner.
2.4 Several of Walsall businesses applying
for a Grant for Business Investment (GBI) have also reported frustration
at the Agency's application process and more than one company
has reported 'giving up' after being asked several times to provide
additional information. It should be noted that other businesses
have reported satisfaction with the GBI application process but
this experience doesn't appear to be consistent.
2.5 In terms of Business Link, new contracts
have been issued with Black Country Enterprise (BCE), the Agency
that holds the largest local contract for start up support across
Walsall and the Black Country. At a time when start up support
is more crucial than ever, contracted start up support levels
for the Black Country will shrink to 312 starts in 2009-10 down
from 480 starts in 2008-09, a fall of 33%. At a time when
the Black Country needs to increase its rate of new business starts
to help close the GVA gap with the rest of the West Midlands this
makes little sense. Business Link appear to be aiming for a model
of distributed delivery of new starts above and beyond the BCE
contract but it is unclear what this means in practice and what
guarantees there are that the Black Country would benefit. At
a time when the four Black Country local authorities and Black
Country Consortium are working with AWM and Business Link to utilise
ERDF Priority 2 funding to add value to the start up offer
across the sub region this approach from Business Link seems disjointed
and not conducive to promoting enterprise. It has been stated
from the outset that any additional service "purchased"
using ERDF should add to and not displace pre-existing Business
Link activity in the Black Country.
2.6 Further, in terms of pre-engagement
activity Black Country Enterprise have been contracted to deliver
engagement with 2,835 individuals in 2009-10 up from
800 on 2008-09. Again, this is at a time when the Black Country
Consortium and partners are working with Business Link to augment
pre-engagement activity with ERDF. This appears similarly disjointed
and it is unclear how these additional pre-engagements will be
supported through to start up given a possible fall in start up
provision. The potential for overlaps with the Priority 2 programme
around both pre-engagement and start ups is evident despite that
fact that Business Link have been engaged in the application process
from the outset. The entire contracting process with Business
Link has the appearance of being dominated by outputs and a focus
on quantity rather than quality of service which is crucial in
the current climate.
2.7 Through its engagement with Walsall
Companies, the Councils Enterprise and Business Support team makes
a significant level of referrals to mainstream business support
provision. Consequently this service is a useful lead generator
for Business Link with a high level of referrals made. Business
Link have worked closely with all local authorities to ensure
effective referral mechanisms which has culminated in a dedicated
referral line and the signing of a Memorandum of Understanding
with each local authority. However, the process of managing referrals
remains inconsistent. Specifically the business support team used
to make referrals directly to AWM for investment support applications,
but due to capacity issues at the Agency these referrals are now
directed via Business Link. Whilst support from an access to finance
advisor may be more appropriate, Business Link have been insistent
that all referrals undergo a business health check in the first
instance. Whilst this may be appropriate for businesses that are
not investment ready, this isn't always the case and a degree
of flexibility should enable eligible businesses to progress directly
to support with an application rather than undergoing a process
that enables Business Link to meet its targets. This is incongruous
with a demand led service and some businesses have expressed dissatisfaction
with the health check process. One business appears to have been
wrongly informed that is was ineligible for GBI. These issues
have been discussed with Business Link and all parties are looking
at ways to improve the referral process.
2.8 Walsall Partners have been looking to
implement a series of enterprise and business support initiatives
to meet local need through Working Neighbourhoods Fund. A Target
Action Plan (TAP) process involving all local partners in ongoing
and ensure that projects reflect local priorities and avoid duplication.
A difficulty with this process has been ensuring alignment with
mainstream business support provision and the BSSP model. Business
Link have indicated they are keen to support this process and
dialogue is ongoing to ensure effective alignment. However, communication
on any pipeline activity from Business Link needs to be reviewed
so that local partners responding to the economic downturn in
their own local areas aren't forced to either delay initiatives
to ensure alignment or run the risk of implementing projects that
are disjointed from mainstream provision. Whilst the fundamental
principle behind business simplification is sound, the process
should be flexible enough to allow for local contingency, especially
in the current economic climate.
2.9 Impact measurement is crucial to monitor
the effectiveness of enterprise and business support programmes
and Business Link provide regular quarterly updates on penetration
and assists. To date the data has consisted of headline statistics
but Business Link have been working with partners to identify
additional information requirements have committed to providing
this from April 2009.
3. The response of banks and other financial
institutions to government and other initiatives to stimulate
bank lending and the access of businesses in the region to credit
3.1 Anecdotal evidence from business engagement
suggests that access to credit remains problematic for businesses
looking to make investments although some businesses have been
supported to complete investment projects that have levered in
various sources of finance, even in the current economic climate.
3.2 Discussion with banks have suggested
some issues remain with credit initiatives and in particular the
Enterprise Finance Guarantee scheme (previously the Small Firms
Loan Guarantee fund) and even though 75% of the loan is guaranteed
there is still the reluctance on the part of banks to issue a
loan if there is any degree of risk given they must still underwrite
the remainder of the loan.
4. The role of the West Midlands Task Force
established by the Regional Minister in helping businesses cope
with the economic downturn
4.1 Communication at a local level could
be improved so areas of best practice and learning could be more
effectively disseminated. Some activity has taken place, supported
by the WMLGA and WMRA, but much of the information on the activity
of the Task Force comes to economic development partners through
the Council's communications team and there is a strong case for
improved connections direct with delivery partners. Overall it
is helpful to have a regional focus point where all agencies report
into but we need to make better use of the collate information
and knowledge.
4.2 Many businesses themselves are likely
unaware of the activities of the West Midlands Task Force, or
if they are aware, how the work of the Task Force directly benefits
them. Attempts have been made to engage businesses, such as with
the www.supportwm.co.uk website but combined with other regional
and national business support portals including www.businesslinkwm.co.uk,
the Business Link credit crunch helpline and www.realhelpnow.gov.uk,
this is actually exacerbating the proliferation of support portals
at a time when we are being directed to simplify our enterprise
and business support portfolio.
5. The role of other Government agencies such
as the Government Office for the West Midlands, and of partnerships
between Government agencies, local government and the private
sector, in providing support for businesses
5.1 Local partnership arrangements are responding
well to offer coordinated support to businesses. Examples include
Walsall's Redundancy Support initiative, Support into Work events,
TAP groups on enterprise as well as worklessness, skills and NEETS
and the Retail Academy and Construction Academy initiatives which
have supported large scale recruitment for investments and support
around construction skills and procurement respectively. AWM and
Business Link are represented on all these groups but have been
infrequent attendees.
5.2 Respondents to Walsall's Business Needs
Survey were asked to identify key challenges currently facing
their business. The highest priority for most respondents was
the ongoing issues of business rates and whether there can be
any reductions or rebates in the current climate. The Council
is working hard to promote and implement rate relief measure but
for many businesses struggling in the current climate these do
not go far enough.
5.3 Another key issue identified within
the survey was business crime and the impact this has on productivity
and business investment. Almost 60% of respondents that said they
had been the victim of crime against their business and Walsall
is looking to pilot an imitative to support these firms and attempt
measure the underlying economic impact. It's becoming clear that
business crime should become a priority for central and local
government and more should be done to support all businesses in
this area.
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