State of the West Midlands 2010 report published

State of the West Midlands 2010

The State of the West Midlands 2010 report is now available, accessible through this interactive website or as a pdf download (1.74 Mb).

The report sets out the evidence about some of the key challenges facing the West Midlands and its localities. Since the general election earlier in the year, much has changed in the way that the West Midlands is governed, but the big issues that it faces remain. Issues such as the growing economic output gap, high levels of worklessness, skills levels, the ageing population, the consequences of climate change and the poor image of the West Midlands.

This year, for the first time, we have published the report in an interactive web version (as well as a pdf -1.74Mb). This will allow you to provide comments on the report, as well as providing easy access to the issues that are of most interest to you.

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What will spending cuts mean for the West Midlands?

Tomorrow sees the long awaited publication of the government’s Comprehensive Spending Review. It will end months of speculation by setting up where the cuts in government spending will fall and how deep they will be. But what might it all mean for the West Midlands?

To try and answer this question, the Observatory has carried out a number of pieces of work over the last few weeks. These are summarised in a new report published today.  Amongst its findings are that:

  • An estimated £43 billion as spent on public services in the West Midlands in 2008-09 and the public sector employed nearly half a million people
  • More than 80,000 public service jobs could be lost in the West Midlands by 2016
  • Up to 300,000 private sector jobs are at risk due to spending cuts, although actual job losses will be lower than that
  • The places which will be hardest hit in the short term are those with concentrations of public sector jobs, such as Birmingham, Bromsgrove, Dudley, Shrewsbury, Stafford, Wolverhampton and Worcester
  • In the longer term, some of these places are likely to recover well, but others will continue to suffer because they have weaker economies. Places most vulnerable in the longer term include Birmingham, Dudley, Sandwell, Stoke-on-Trent, Walsall, Wolverhampton and Wyre Forest (Kidderminster)

The report draws on information from a number of other reports published by the Observatory in recent weeks. These include a briefing paper on the local impact of public sector job cuts, a series of projections based on our Policy Assessment Model and a report identifying locations vulnerable to cuts in public sector spending.

Up-skilling and diversification are key to growth and job creation across the West Midlands

Targeting investment on higher value added sectors such as digital media and medical technologies, and developing a workforce with the right skills to service those sectors would significantly increase job growth and the prosperity of the West Midlands according to new research.

The research (pdf, 498kb), undertaken by the West Midlands Observatory, shows that the potential benefits of targeting investment are substantial. If workforce skill levels in the West Midlands were increased to match the England average, growth in Gross Value Added (GVA) — the measure of economic output per head of population — over the next 5 years would increase by 2 percentage points from 10% to 12% and net new job creation would nearly double from 11,000 to 21,000. If in addition more businesses in higher value added sectors and clusters were attracted to the West Midlands, so that their share of economic activity reflected the position nationally, GVA would grow by some 23% by 2015 and more than 200,000 net new jobs would be created.

Local authorities, business groups and other key partners across the West Midlands are looking to achieve sustainable economic growth in jobs and GVA over the next 5 years. This new research shows how, in a time of austerity and funding cuts, the Observatory can provide authoritative and objective research to help decision makers target limited resources and do more with less.

The research (pdf, 498kb) provides an insight into the region’s existing and likely future skill needs. It has been produced to inform the development of skills and investment priorities that focus shrinking levels of public sector investment in areas that will maximise  impact.

A range of key investment locations across the region, including Longbridge and Eastside in Birmingham, Ansty Park in Coventry, i54 in Staffordshire, Coventry and Wolverhampton city centres and Dudley, Telford, Walsall and West Bromwich town centres, can play a key part in diversifying local economies.

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Transformational change can generate substantial new jobs in West Midlands over next five years

The pace of economic growth in the West Midlands over the next five years is forecast to be modest. Only 11,000 net new jobs (representing growth of 5% in total employment) are expected to be created between 2010 and 2015.

However, the Observatory’s new report The West Midlands economy post recession: key issues and challenges (pdf, 844kb) includes scenarios illustrating the benefits for the West Midlands in terms of new job creation — if action is taken to support fundamental, transformational change.

Scenario one: up-skilling the workforce within existing businesses

If workforce skill levels in the West Midlands were raised to match the England average, it’s estimated that net increase in employment over the next five years would almost double to around 21,000 jobs.

The main beneficiaries would be sectors where skill gaps and shortages act as a significant constraint on growth, such as:

  • ICT
  • High value added business & professional services
  • Wholesale & retail distribution
  • Transport

Scenario two: up-skilling plus diversification of the economy

If more businesses in higher value added sectors and clusters were also attracted to the West Midlands, such that their share of GVA matched the England average, the impact would be much more significant with the creation of more than 200,000 net new jobs.

High value added activities such as high value added business & professional services (where more than 100,000 net new jobs would be created) and ICT (30,000 net new jobs) are notable beneficiaries.

There would also be modest increases in employment levels in engineering (nearly 3,000 net new jobs) and manufacturing (nearly 6,000 net new jobs).

Related links

Read more about the future of the West Midlands economy in our report:

Research published on prospects for the West Midlands economy post recession

Report cover: The West Midlands economy post recessionAt the end of June, the Observatory published The West Midlands Economy Post Recession: Key Issues and Challenges (pdf, 844kb), a major piece of research exploring the changing needs of the region’s economy and labour market as it emerges from recession.

The research is informing the decisions of employers, individuals, providers and the skills system as they look to focus their investment in key areas to maximise impact.

Firstly, the research considers the region’s recent poor economic performance and the key factors that have contributed to this.

We detail the weaknesses within the region’s economic structure and, in particular, the dependence on public sector and lower value added private sector activities, in terms of GVA and jobs, and the limited representation of high value added, knowledge-based sectors.

We also highlight the low rates of productivity in many of the sectors that dominate the regional economy and assess the skill gaps and shortages businesses in the West Midlands face and the impact on productivity and performance.

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How is the Rural Regeneration Zone doing?

This post shares key findings from our annual monitoring report on the Rural Regeneration Zone (RRZ) carried out over 2009 and 2010.  The final report will be published shortly.

Impact of project work

Since the RRZ was set up, the area has improved in many ways.  So far 1,400 new jobs have been created and 800 existing jobs have been safeguarded.  More jobs are expected to be created (1,500) and safeguarded (200) by 2015.

RRZ investment in multi-use facilities has also improved access to services.  The main improvements have been around:

  • Childcare provision – 845 more places each week
  • Volunteering opportunities – 165 more places
  • Library services – 37,700 more library projects
  • Development of new services – 98 new or enhanced services in towns and villages

Projects such as Connections to Opportunities, Rethink and Care Farming are delivering further improvements in the RRZ.  More details are included in the report.

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Key findings for West Midlands from National Employer Skills Survey 2009

Cover of report National Employers Skills Survey 2009 report - key findings for West Midlands regionThanks to  Sam Richardson from the Young People’s Learning Agency (formerly of Learning and Skills Council West Midlands) for contributing this post.

A report on key findings for the West Midlands (pdf, 1mb) from the National Employer Skills Survey 2009 was published in March.

The survey consisted of just over 79,000 telephone interviews (8,186 in the West Midlands) with employers across England (the largest number to date) between March and July 2009.

It represents by far the largest and most comprehensive source of information on current skills issues affecting employers in England.

The UK Commission for Employment and Skills previously published a summary of national findings.

A more comprehensive description of the national results will be available in a full report due June 2010 (after the election). The survey data is available for exploration and data mining at http://nessdata.ukces.org.uk.