Just when we had started to get excited about the great ‘Levelling Up’ agenda, COVID-19 had other ideas and we are now back to quoting a phrase far too familiar with the region; the ‘phoenix rising from the flames’. There were big challenges for the West Midlands pre-pandemic and there are going to be huge challenges post-pandemic. However, minds must turn to the ‘Great Recovery’ or there is a real danger that some of the hurdles ahead may become insurmountable.
In January 2020, buoyed by the fact that Brexit had finally ‘been done’ enabling the country to (in theory) move on and being intrigued with the concept of ‘levelling up the economy’, I co-founded a new regional think tank. After extensive deliberations on branding and its potential implications on the geography of our work; we finally settled on the organisation’s name – the Centre for the New Midlands. Less than 3 months later and I feel a tad uneasy that we are now absolutely looking at a ‘New Midlands’ as COVID-19 attempts to devastate all in its path.
The West Midlands (our initial area of focus) has been hit hard already by COVID-19 and must brace itself for more difficulties ahead. A recent Oxford Economics study exploring the impact of the coronavirus outbreak on all major European cities in 2020, predicted that Birmingham’s Gross Domestic Product (GDP) would contract by nearly 7% in 2020. It is not surprising that the region faces a really challenging period as we only need to look at The Office for Budget Responsibility’s (OBR) ‘Coronavirus Reference Scenario’ which highlighted that ‘Education’; ‘Accommodation and Food Services’; ‘Construction’ and ‘Manufacturing’ would be the sectors to experience the most significant ‘output losses’ in the second quarter of 2020. All of these sectors are amongst the region’s strengths.
Alongside the sheer drop in output and inevitable job losses across the region, the West Midlands will also have to respond to the economic shock from some areas of significant weakness. As an example, it is a region with pockets of major deprivation as laid bare in the Index of Multiple Deprivation 2019 (IMD2019), which found that 41.3% of Birmingham’s neighbourhoods are in the most deprived 10% of neighbourhoods nationally. Similarly, data captured by the Office for National Statistics (ONS) 2 weeks before the UK went into lockdown indicates that Birmingham, Wolverhampton and Sandwell all appeared in the UK’s top 10 UK local authorities with the highest % of their residents claiming ‘unemployment related’ benefits. These three local authorities combined already had over 70,000 residents as ‘claimants’ before the pandemic hit; we wait to see how many of the country’s additional ‘COVID-19’ 1.5 million Universal Credit applicants they are joined by.
However, there are reasons to be optimistic. Pre-pandemic, the West Midlands was also the ‘export capital’ of the UK with over £17.8 billion worth of goods exported globally from the region in 2017. The Life Sciences’ sector has been a success story for the region with over 400 businesses in the West Midlands Combined Authority (WMCA) area, employing around 11,000 employees and generating approximately £4 billion turnover. The region’s universities were also performing well within a sector which has been plagued by negative publicity for its perceived failings to provide value for money; excessive senior management pay and inability to defend free speech across its campuses.
The region also has HS2 coming down the track (forgive me) as well as successfully bidding to be the home to the UK’s first multi-city 5G test bed. Whilst both the UK City of Culture 2021 and Commonwealth Games 2022 were widely acknowledged as bringing substantial economic boosts for Coventry and Birmingham respectively (in terms of regeneration and tourism), both of these major events have the potential to provide the economic ‘shot in the arm’ that perhaps may have been taken for granted pre-pandemic. The impact on broader society of such positive and transformative events also cannot and should not, be underestimated.
There will be plenty of opportunity to analyse what could have been done better in terms of central government working with the regions. One of the biggest challenges which will need to be addressed in the longer-term is how government support and communications are disseminated from the centre and what roles do the Regional Growth Hubs/Chambers of Commerce have vs new structures such as Combined Authorities. During DevoConnect’s excellent recent webinar, Andy Burnham (Metro Mayor of Greater Manchester) gave a quite telling example of how a virus Testing Centre was sited at Manchester Airport, without his team’s engagement, which failed to attract anywhere near the numbers anticipated due to local residents’ reluctance to travel to the location in ‘normal’ times. Central government has understandably been seeking to find a consistent approach to provide and disseminate support packages to business and society across the country, and has done so through the traditional governance model of Local Authorities. However, what role should the Combined Authorities play when challenges do not stop at the borders of the local authority?
Whilst it is understandable that the region’s leaders are working to draw up a West Midlands Economic Recovery Plan; the fundamentals of the ‘Local Industrial Strategy’ must remain as the absolute guiding principles for how the West Midlands will rebound from the shock of COVID-19. The significant strategic opportunities for the region remain; transport innovation; data-driven healthcare and life sciences as well as expansion of the creative industries.
Short-term economic support programmes will be essential, and indeed welcome, but both national and regional decision-makers need to remain focussed on driving innovation and the growth areas of tomorrow – however difficult that may seem today.
Chris Smith, Director and Co-Founder of The Centre for the New Midlands