Executive Director’s Report

                                    August 2009

This report covers the transition from Business Voice WM to Business Voice WM during the month of August 2009

Business Voice WM was formed. Urgent action has been introduced to help the construction sector weather the recession. Business urged for tougher action to reshape the regional planning system to help grow the regional economy. The Environment Agency was told to move quickly to mitigate the potential of flooding from the River Tame for Birmingham, the Black Country, Tamworth and north Warwickshire.

Business Voice WM

The West Midlands business community has created a powerful new voice to campaign on key issues.

The alliance brings together the Business Voice WM and the One Voice Group to form Business Voice WM (BVWM).

It is believed to be the first time independent representative organisations have chosen to combine to speak and campaign with one voice.

The aim is to give the region’s business community much greater influence on major decisions affecting industry and commerce, and ensure that the voice of the region is heard in Westminster and Brussels.

It will also help to address key strategic objectives: transport – growing congestion on our roads and poor integration between the different elements of our transport network; skills – too many in the workforce lack qualifications while graduate retention is poor; crime – which is estimated to cost business £14,000 an hour; and recovery from the recession – liquidity problems coupled with inherent structural issues and a poor record on entrepreneurialism has seen the West Midlands hardest hit of all the regions.

The launch of Business Voice WM will ensure business gets a place on the Joint Strategy and Investment Board – the new organisation that will bring together council leaders and regional development agency Advantage West Midlands. The One Voice Group was inspired by Birmingham Chamber of Commerce (BCI) Chief Executive Jerry Blackett.

Of major strategic importance, the JSIB will make the key decisions on economic development and regional planning from April 2010 after the abolition of the West Midlands Regional Assembly.

Another key driver behind the formation of BVWM stems from the regular complaints of government and the RDA that it receives mixed messages from too many different lobbying organisations.

Both One Voice and Business Voice WM had gained successes for the business community already. These successes include:

• Quick win improvements on the road network in the West Midlands conurbation;
• Workplace training accreditation scheme for engineering firms;
• On-going police operation against truck hijackers;
• Successful business campaign for the re-development of Birmingham New Street Station;
• On-going work for Accelerated Development Zones funding of major infrastructure work.

Now, with the two business umbrella organisations becoming one business umbrella organisation, it is expected that much more can be achieved for the business community.

Business Voice WM believes it has finally found the solution. BVWM chairman Barrie Williams said: “We have worked very hard to build Business Voice WM with a great deal of success.

“But we were always aware there were some significant gaps – for example, the CBI was not a member.

“Discussions have taken place with the CBI and One Voice for some time, and we are very pleased that these have come to a successful conclusion.

“This is in many respects a fresh start. We intend to make the most of it. ”

BVWM Executive Director James Watkins said: “Despite all our efforts, business has been open to the accusation that its message lacks clarity and unanimity.

“For some time now it has certainly become obvious that, with the changing representative structure post the demise of the Regional Assembly, business either had to come together as one or miss out.”

Mr Blackett, One Voice Group Chairman, said: “We have always sought to represent business to the best of our abilities. There have been some significant wins – for example, the pledge of a new modern station for Birmingham.

“We also initiated a ‘quick wins’ campaign to iron out congestion black spots on the road of the West Midlands with the minimum of fuss and cost. This was implemented with great success.

“Today it is ever more important that our message to the Government is crystal clear – be it the state of the auto industry, the low level of skills and entrepreneurship in the West Midlands, or the digital future.

“By campaigning together we will be able to lever a greater presence and we believe our representations will now carry extra weight.”

Chris Clifford, regional director of the CBI, said: “This is really good news for business across the West Midlands.

“Now we are all pulling as one, we can make our campaigning and lobbying count ever more decisively. With the recession still taking its toll, businesses, both small and large, are looking to us for a lead. They will not be disappointed.”

The new entity comes into being immediately and will take the form of a main board with policy groups reporting to it. It will seek to filter all the various views of constituent organisations, pulling these together into a cohesive strategy to bring benefit to both members and the West Midlands region as a whole.

Construction

The Regional Economic Taskforce has recognised the need to support the West Midlands construction industry as it continues to struggle in the recession.

Under the stewardship of the West Midlands Centre for Constructing Excellence (WMCCE) the building blocks of an action plan have been put in place to help take the sector forward, pulling together and identifying initiatives and support that need to be both coordinated and communicated.

Since the plan’s inception, actions confirmed as available now for construction businesses across the West Midlands region are:

• Bridge Loans via Advantage West Midlands’ (AWM)’s Transition Loan Fund
• Gap funding for major construction work to continue via Advantage West Midlands’ Development Gap Funding Scheme
• WMCCE and Business Link West Midlands helping contractors to bid for work (eg.,for London 2012 Olympic construction work)
• Subsidised apprenticeships for construction firms
• Homes and Communities Agency’s (HCA) Kick Start programme to help unlock housing schemes affected by the credit crunch.

The Action Plan initiative follows pleas from Business Voice WM and proposals from members including the West Midlands Developers Alliance, the Royal Institution of Chartered Surveyors and WMCCE stakeholders.

The full plan is still being worked out and will remain flexible to respond to changing circumstances but Business Voice WM (BVWM) has praised the Minister for the West Midlands, Ian Austin MP for responding positively.

George Marsh, chair of WMCCE, who also chairs the Construction Action Plan Taskforce, said:

“The construction industry was one of the first to be hit by what has turned out to be one of the worst recessions in living memory… and it is still hurting. There was a strong feeling that we were being seen only in terms of bricks and mortar, not professions, jobs and livelihoods.

“Firms continue to struggle, some major names have gone out of business, and there is clearly a way to go yet before we see a concerted rebound. Many sites and development schemes are still mothballed, offices and other types of commercial property stand empty, with developers very cautious in their outlook and funding organisations reluctant to commit. Whilst there is some recruitment, there are also significant redundancies and short-time working still occurring.

“The Government has done its best to stimulate public sector projects and keep some capacity in the sector, but we felt much more had to be done.

“What we are putting together is a framework for recovery, with the public and private sectors working in partnership. Already substantial progress has been made and we are confident it will make a difference.”

Debbie Walsh, BVWM board member and the Royal Institution of Chartered Surveyors (RICS) head of regional policy and communications, added:

“In current conditions, access to finance and cash flow are very often the biggest issues which cause construction companies to go under.

“Finance arrangements are extremely difficult and in some cases unsustainable. Material suppliers are failing on a daily basis due to bad debt provision. Hire companies have also seen a fall in demand and the supply chain is now a key focus for cost shedding, which in turn leads to lay-offs.

“These new measures are designed to bolster the battered finances of companies who it is vital we retain if the industry is not to be left threadbare when the upturn comes.

“We put our case direct to government, appearing before the Minister’s Regional Economic Taskforce. The construction action plan has developed from there. While it is not yet in final form, we are getting on with ensuring implementation of what has already been agreed because time is of the essence if we are to stem the job losses and the company failures.

“Construction firms’ cash flow problems need to be addressed via soft loans now.”

Hence, in conjunction with regional development agency AWM, the existing Transition Loan Fund can provide bridging finance to nurse firms through the worst of the crisis.

“This is particularly important for contractors working on public projects where cash flow can be critical,” cautioned Mr Marsh.

Development gap funding is also still available for construction businesses. Last year AWM announced that it was providing a £48 million package which was expected to trigger £192 million of new, high-quality commercial and industrial development opportunities in the region by 2013, schemes that might otherwise be financially unviable in the tough economic climate.

Assistance from £100,000 to £9 million is available to private sector developers – a similar push which ran in 2006 saw £34 million of public sector finance lever in approximately £160 million of private sector investment.

Mr Marsh said: “AWM’s gap funding operations have been an undoubted success – this is not the time to knock it on the head. It is vital it continues while the sector remains in distress.”

Continuing efforts to provide information and support to companies about London Olympics 2012 opportunities are designed to further boost order books.

As to apprentices, it has been agreed that there should be a further drive to sell the key benefits to employers. In addition support would be offered to ‘displaced’ apprentices – many have had their dreams of a career dashed – via industry matching services.

“The potential loss of apprenticeships could be very damaging to the future of the industry,” said Ms Walsh. “We must give new hope to these young people and both retain and increase our skills base”

A further move would see the dissemination of case studies and good procurement practice between local authorities in order to make it easier for firms to bid for public sector contracts, and to ensure that local sourcing and employment is emphasised.

The full construction action plan is expected to be out by the end of September.

Planning

The West Midlands needs to expand its horizons if it is to thrive and prosper, it was claimed in a submission to the West Midlands Regional Assembly.

And that applies across a vast range of issues – from flood defence to transport congestion; from energy initiatives to tourism.

Business says much is being done but there are many more challenges.

The business council was responding to planning proposals from the Regional Assembly, set to form part of the legally backed Regional Spatial Strategy, a critical blueprint for the future.

James Watkins, executive director, said: “Problems with the transport infrastructure are costing every UK business an average £27,000 a year.

“For firms in the West Midlands – at the heart of the country – congestion and poor infrastructure is being felt every day by business. This is despite the fact that being located in the Midlands should provide geographical advantages – from just-in-time deliveries to developing the logistics and professional services sectors.

“And energy too is a critical issue for business – secure power sources are vitally important.

“For the land locked West Midlands, which can not fully benefit from the immediate effects of wind and wave power and the region widely seen as the centre for UK manufacturing, any disruption in energy supplies is detrimental not just to the region’s performance but to the national economy.

“The business community is concerned at the threat to power supplies for energy intensive manufacturing businesses and these concerns could be accentuated, if matters are not addressed, by pressures on the national grid from the planned house building programme.”

Business has submitted a host of ideas which, it hopes, will take the blueprint to a new level.

Transport

The Welsh Border region desperately needs improved transport links, Business Voice WM has warned.

And it says that, following years of inaction, the Government must heed the message.

The BVWM hit out following scathing criticism of the state of affairs by MPs on the Commons Welsh Affairs Select Committee.

Rural Economy Group chairman and National Farmers Union West Midlands regional director David Collier said:

“The damning report by the Committee gives no hiding place for Ministers – after years of failing to deal with the poor transport links across the Welsh border.

“That is why I have written to the Minister for the West Midlands, Ian Austin, to ask him to use his good offices to ensure the Government fully accepts the recommendations of this Labour dominated committee so that action finally takes place.”

BVWM, in its submission to the Committee, called for closer co-operation between the Government and the Welsh Assembly.

It urged more bridge crossings between Herefordshire and Wales; better connections between Cardiff and Herefordshire, south Worcestershire and Shropshire; and improved rail services.

In a sharply worded report, the Welsh Affairs Select Committee called for an end to overcrowding on trains that travel across the border, improved rail rolling stock for services crossing into mid-Wales, and extra spending on roads.

Mr Collier added:

“The findings reflect the frustration that rural businesses and communities in the Welsh border areas feel day in and day out.

“We now await the Government response to this report with great interest – and the West Midlands regional business community will campaign so that it is seen as a turning point for change.”

Floods

Midlands businesses, already undermined by the recession, are increasingly at risk of being washed away in a flood.

Business Voice WM fears a re-run of the 2007 calamity and has highlighted an increased risk from the River Tame for the Birmingham, Walsall and Tamworth areas.

Replying to the Environment Agency’s River Tame Strategy consultation, BVWM says gaps remain and defences need to be stronger.

James Watkins, executive director, cautioned: “The floods that have impacted on the business community in the River Tame area have cost the regional economy millions of pounds.

“Delays to just-in-time deliveries, flooded business premises and flooded roads from 2007 are still being felt in the business cycles of local firms.

“The threat of further flooding – combined with a recession – is a scenario that businesses are desperate to avoid.”

Mr Watkins said the impact of River Tame flooding had a disproportionate impact on the regional economy – hitting a range of business sectors including manufacturing, professional services and farming.

Stressing “the economic primacy of this area to the national and regional economy,” he urged the need to safeguard local jobs during an economic downturn.

Mr Watkins continued: “Parts of the River Tame area, such as Birmingham and the Black Country, are particularly prone to groundwater flooding.

“With the water table rising due to the decline in manufacturing industry combined with climate change, they are at high risk.”

Business was concerned at claims there was currently no one organisation with responsibility to respond.

“Business believes that this situation should not continue and it should be made clear in the River Tame Strategy that the Environment Agency assumes responsibility for dealing with groundwater flooding,” said Mr Watkins.

“Such a statement would give reassurance to business, as well as residents, that clear lines of responsibility are in place rather than confusion as to different bodies being responsible for different forms of flooding.

“It is a matter of regret that the consultation, while referring to the need for a flood warning system, goes into no detail on this matter.

“This is a matter of grave concern for businesses which became acutely aware of the lack of warning in 2007 caused, in part, by the absence of a joined up approach between the Environment Agency and the Meteorological Office. We understand lessons are being learnt between these two organisations so that co-ordination is improved in order that the mistakes do not happen again.

“A good flood warning system is critical for business continuity procedures to be implemented.”

BVWM is calling for greater detail to be included in the River Tame Strategy “as to how this flood warning system will operate and how local businesses and residents will be made aware”.

And it slams the document for ignoring the significant increase in house building proposed across the West Midlands.

“The draft River Tame Strategy does not refer to this matter at all.

“We would propose that for the strategy to have any utility over the medium term it needs to consider future housing developments in the River Tame area as well as existing properties when presenting its plans for flood defences.”

The BVWM adds: “The River Tame flood catchment area lies close to the country’s largest inland oil depot at Kingsbury in Warwickshire. The security of this depot is critical for business continuity as well as for the strategic interests of the country.

“We would therefore request clarification that the proposals included in the draft document will provide full security to the depot from flooding.”

It concluded: “Business welcomes this consultation as it is crucial to get action as soon as it is possible so that the risk of the costly floods of 2007 happening again in this area can be mitigated as far as it is possible.

“We believe the proposals we have made would give businesses confidence that everything that can be done will be done.”