SECTOR FOCUS: FINANCE
SPONSORED BY: UNIVERSITY OF BIRMINGHAM
From the Midlands Engine to the 'Northern' Midlands Engine: The March 2016 Budget
By Professor John Bryson Academic Director of City-REDI
The 2016 Autumn Statement redefined the Midlands (East and West) as the Midlands Engine. This new geographical definition reflects the new sub-national policy agenda that has emerged as one response to localism. Both the Midlands Engine and the Northern Powerhouse are political creations rather than economic realities; neither is a true reflection of the actual functioning economic geography of these areas. It is arguable that there is
more national economic value in supporting the Midlands Engine compared to the Northern Powerhouse, but this is not a politically acceptable argument. There are three reasons to justify supporting the Midlands Engine in the March 2016 budget. First, the Midlands is the only part of the UK that has a trading surplus with China. Second, parts of the Midlands consume more tax revenue than they produce. Third, the Midlands region is underperforming: if it matched the predicted growth rate for the UK over the next 15 years, it could create 300,000 jobs and contribute at additional £34bn to the UK economy. Politically, the problem is
that the Midlands Engine is not considered to be part of the disadvantaged north - or is this the politically advantaged north? The new ‘Northern’ Midlands Engine has the potential to make a major contribution to the national economy. It is time to rebalance policy across the UK by ensuring that all regions are provided with the opportunity to contribute to national competitiveness and, at the same time, create better outcomes for the people living across the new Northern Midlands Engine.
46 CHAMBERLINK APRIL 2016 Curzon Street: major investment opportunity
Mega bid for the Midlands T
he Midlands’ biggest-ever bid for investment has been unveiled – with the region’s power brokers coming together on an unprecedented scale in
an attempt to win £14 billion from global investors and transform the area into a world-leading economy. Eleven Local Enterprise Partnerships (LEPs) have united in a bid to persuade money-men that the Midlands represents one of the most attractive investment propositions anywhere in the world. Dubbed the Midlands Engine Pitchbook, the plan will
be used to showcase investment opportunities to key markets such as China and the US. It unveils 33 major opportunities which, combined, can create 178,000 jobs, 32,000 new homes and 57.9 million sq ft of property space for the region. The Midlands is the largest economic area outside
London, and attracted 880 foreign direct investment projects between 2011 and 2015, more than any other region. It already generates £222 billion to the British economy, which has increased by 30 per cent in the past decade. The region is already home to major investors including Jaguar Land Rover, HSBC, Deutsche Bank, Mondelez, Toyota UK and Boots. Business Secretary Sajid Javid said: “The Midlands is
a region on the rise with a unique offer to investors and is home to some of the world’s biggest companies. By embracing opportunities such as the MIPIM trade fair, we will capitalise on the Midlands’ natural strengths and make it an engine for growth.”
Opportunities in the West Midlands include
investment in HS2, the UK’s most ambitious infrastructure project, which will create over 20,000 new jobs in the Solihull area alone and see the construction of 4,000 new homes in the vicinity of Birmingham’s new HS2 station in Curzon Street. The investment opportunities have been
individually sourced by the UKTI Regeneration Investment Organisation which has a remit to support job creation and economic growth across the UK through attracting institutional investor funding into large scale regeneration schemes. Sir Michael Bear, chairman of the UKTI Regeneration Investment Organisation, said: “The Midlands Engine has grown at record levels over the past decade, and its offer to investors is among the most desirable in the world. Our plan has a clear ambition: to attract investors to one of the world’s most attractive business destinations.” Andy Street, chair of the Greater Birmingham and
Solihull LEP, said: “The Midlands is undergoing a remarkable economic resurgence, underpinned by the talent, infrastructure and support that the region offers to businesses large and small. Launching the Midlands Engine Pitchbook demonstrates how the region has developed a coordinated approach to targeting new investment; by working together, we have a stronger voice and more compelling story to tell the world.
The cost of workplace pensions
Two-thirds of UK workers are now saving through a workplace pension scheme, thanks to automatic pension enrolment, but seven in ten employers are feeling the impact in cost terms. While the focus must remain on
encouraging employees to save into a workplace pension, the pressure is on for employers to improve productivity before other elements of the reward package and profits suffer, particularly as the introduction of the National Living Wage approaches. This is according to the latest
Employee Outlook: Focus on employee attitudes to pay and pensions from the CIPD, the
professional body for HR and people development. The survey of more than 2,000
working adults has found that two- thirds (66 per cent) of employees are now saving through a workplace pension scheme. However, 70 per cent of
employers who have gone through automatic enrolment noted the financial cost on their organisation. The most common reactions to these costs include taking lower profits/absorbing costs (21 per cent), paying the statutory minimum pension contributions for automatically enrolled staff (15 per cent), reducing or stopping wage growth (10 per cent) and reducing
other elements of pay (10 per cent.) Charles Cotton, CIPD
performance and reward adviser, said: “this research encouragingly shows that most employers and employees are contributing well in excess of the minimum rates required under automatic enrolment. However, employers are clearly taking a hit. “What is particularly worrying are
possible changes to how pension contributions will be taxed in future. If changes have to be made then they should come in after 2018 as auto-enrolment will be complete and organisations will have had time to respond to the impact of these other new initiatives.”
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