West Midlands Local Industrial Strategy Overall Economy Evidence September 2018 See the WMCA State of the Region 2018 report for more detail: https://www.wmca.org.uk/media/2435/state-of-the-region-2018.pdf DELIVERING INCLUSIVE GROWTH
Table of Contents Section Sub-Section Slide Number GVA 4 Economic Renaissance 5 Economy Data Challenges & Opportunity 6 Foundations Overview 7-8 Ideas 9-14 People 15-24 Foundations of Productivity Evidence Infrastructure 25-33 Business Environment 34-41 Places 42-45 Grand Challenges Evidence Grand Challenges Evidence 46-50 Acknowledgement of Data/Evidence Input Black Country Consortium Economic Intelligence Unit Black Country LEP West Midlands Growth Company Coventry & Warwickshire LEP DELIVERING INCLUSIVE GROWTH Greater Birmingham & Solihull LEP Warwickshire County Council
Economy Data DELIVERING INCLUSIVE GROWTH
GVA • GVA per hour has increased by more than double • The WMCA total Gross Value Added in 2016 was the rate of the UK over the past year and is £92bn , contributing 5% to the total UK GVA. currently £28.90 per hour worked . However, GVA per hour needs to increase by £3.70 to reach the • GVA per head in the WMCA is currently £22,443 UK level. compared to UK average of £26,621 . GVA per Hour Worked BCLEP £25.5 CWLEP £31.3 GBSLEP £29.4 WMCA £28.9 UK £32.6 £0.0 £5.0 £10.0 £15.0 £20.0 £25.0 £30.0 £35.0 4
Economic Renaissance The West Midlands is a major part of the UK economy, generating £92bn GVA (5% of UK economic output) and achieving over 20% growth in the last 5 years. Our region provides 2 million jobs across a diverse range of sectors, including major multinationals and large numbers of SMEs, including those within essential global supply chains. • GVA per hour has increased by more than double the rate of the UK over the past year • There are 2 million jobs, a record high • Higher level qualifications are increasing faster than the national rate • The youngest population outside London in diverse and stable communities • The West Midlands is the fastest growing UK region for goods exports • FDI projects have almost tripled since 2011/12 • The number of people claiming out-of-work benefits is the lowest its been for over 10 years • We are building more homes, with completions up by 25% over the last two years • Good progress on clean growth, with a 24% increase in economic productivity and 18% decrease in carbon emissions over 5 years DELIVERING INCLUSIVE GROWTH
With distinct challenges and potential External challenges around Brexit and the global Whilst we are growing faster overall than the UK as economy mean we must be clear about our offer and a whole, the output gap in terms of GVA per head what makes this a great place to invest. It will help us with the rest of the UK has increased. Performing respond to changing conditions for trade, investment, to our full potential our economy would be nearly regulation and funding. £17bn (£16.9bn) bigger. And we know that the benefits of growth are not felt by all, in terms of access to jobs and opportunities, Insufficient skills levels stubbornly poor indicators on e.g. healthy life £3.2bn expectancy, and childhood obesity and growing problems of housing affordability. Too few in employment £6.8bn We have low levels of access to green space, local hotspots of poor air quality, 12% of our households in Economy lacking dynamism fuel poverty, and still high levels of carbon emissions. £6.9bn DELIVERING INCLUSIVE GROWTH
Foundations of Productivity Evidence DELIVERING INCLUSIVE GROWTH
Industrial Strategy Foundations of Productivity DELIVERING INCLUSIVE GROWTH
Foundation 1 - Ideas DELIVERING INCLUSIVE GROWTH
Ideas - Context This is an innovative economy, built on the development and commercialisation of new ideas, processes and products The 2017 Science and Innovation Audit frames our understanding how innovation happens and is supported in the region Industrial Strategy establishes the actions we need to drive innovative activity further and maximise impact on productivity Example map showing innovation assets
WM Science and Innovation Audit: Research Quality Field Weighted Citation Index for the 3-LEP HEIs relevant subject areas • The data indicate the excellence of the WMCA’s research in subject areas including Medicine, Energy, Physics and Astronomy, and Chemical Engineering, and Chemistry; in these subjects, the average FCWI is well above both the international, and the UK average. Source: Benchmarking Local Innovation 2017 (ERC & EEN), based on 2012-2014 period 11
WM Science and Innovation Audit: R&D Investment Private sector R&D expenditure and employment in the West Midlands (region) level (2010-15) • Businesses across the WM region invested £2.2bn in R&D in 2015, accounting for 10% of the UK total, with an increase in the share of all UK BERD undertaken in the West Midlands since 2010. • The number of FTEs employed in R&D also increased in both real and proportionate terms from 2010 to 2015; in 2015, there were 19k employees engaged in R&D across the West Midlands, accounting for 9% of the UK total. 12
WM Science and Innovation Audit: Innovate UK Innovate UK grant funding to organisations based in the WMCA (3-LEP) area • Over 400 organisations in the 3-LEP WMCA participated in projects securing Innovate UK funding between 2010 and 2015, equating to grants of £247.5m. This is 8% of the UK total which is a higher share of Innovate UK funding than our population of firms would suggest (6%), indicating the level of innovation activity across our business base. • This relatively high share of Innovate UK funding reflects three further factors outlined by the WMCA: - A high level of engagement of the knowledge base in innovation activity: our universities accounted for 12% of Innovate UK grant funding to all academic institutions over 2010-2015. - Our RTO base, with the MTC securing £44m and WMG approx. £23m over 2010-15. - The scale of R&D activity at JLR, who secured £30m in Innovate UK grants over the 2010-2015 period. 13
Ideas – Opportunities & Challenges Innovation ecosystem Market Strengths Science parks, incubators, accelerators (higher Mobility and transport • • concentrations of the latter than anywhere else, including Construction • London) Energy • Good superfast broadband availability [and 5G] Health • • Somewhere businesses can connect with each other and Creative • • ideas WM performs well in attracting research funding, 8% of • Distinct innovation challenges Innovate UK funding) – higher than its share. Commercially WM commercial innovation activity and investment is moderate engaged academics by UK standards and lower than international competitors. Locally available funding from range of sources has • increased – but opportunity to go further, particularly around 1. Levels of new-to-the-firm innovation activity smaller scale commercial research and process / new ways 2. Levels new-to-the-market innovation activity of doing business. 3. Levels of investment in R&D and design SIA shows good at product, less good at process innovation • 4. Collaboration via B2B and U2B (university to business) in businesses. Innovation gaps are generally larger for Greater Birmingham Innovative strengths and Solihull LEP and the Black Country LEP than for Coventry Advanced manufacturing and engineering • and Warwickshire. Digital Technologies and Data • Systems integration •
Foundation 2 - People DELIVERING INCLUSIVE GROWTH
People – Context A high performing labour market has a crucial role to play in enabling local people, businesses and the wider West Midlands economy to flourish and thrive. We want to better match the skills of the people in our region with the current and future needs of our businesses, to accelerate productivity and deliver economic growth. In Summer 2018 we published the findings of the Productivity & Skills Commission and our response, the Regional Skills Plan. The Regional Skills Plan aims to ensure: More people move into employment • More people move into higher skilled jobs • More skilled employees available to support business growth and productivity • All communities benefit from the region’s economic growth • An agile and responsive skills system that is more aligned to the needs of business and individuals • We know what we need to do to increase skill levels and recently secured a Skills Deal with Government. This is an important step which could unlock up to £69m for business, young people and adults. Opportunity through our commissioning of the £100m+ Adult Education Budget to generate a shift in the way the region works together to deliver more for our residents and businesses.
Jobs & Earnings • • The total average annual earnings for residents employed full- Jobs are increasing and there are currently 2 million time across the WMCA rose by £472 on the year before to people working in the WMCA area, with 1.2m £27,574 in 2017. employed in the transformational sectors and 808,365 in the enabling sectors in 2016. • 75.7% of employees are earning above the UK living wage. 17
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