Executive Director’s Report

                                    February 2011

Business Voice WM led on two major campaigns to develop Midlands manufacturing. Ministers promised Business Voice WM that it would review its controversial tax on empty properties. Internships were heralded as a major step forward to tackle the skills crisis. Business Voice WM played a leading role in ensuring Parliament is now focusing on tacking the scourge of business crime. MPs urged businesses to vote “Yes” in May’s electoral reform referendum.

Manufacturing

i)             Technology and Innovation Centres

The first of the Government’s new Technology and Innovation Centres should be established in the West Midlands.

Responding to the Technology Strategy Board on a consultation into TICs, Business Voice West Midlands said such a move would boost both the region and the wider UK economy.

Noting a planned March announcement for a TIC covering high value manufacturing, Denise Craig, BVWM manufacturing policy development group chairman, said: “While areas of the UK, such as the North West, have their specialisms, it is the West Midlands that can be described as being the heart of UK manufacturing with its extensive business base in aerospace, automotive, ceramics and a score of other advanced sectors.

“It would be to the benefit of the UK economy as well as the West Midlands if this first TIC was established here.”

It offered the chance to “move the economy forward and help realise the Government’s objective for sustainable growth to be engendered”.

But she urged the Government to go further.

“We believe there needs to be more innovative solutions to bring together universities and businesses to harness R&D and access pilot projects.

“Alongside TICs, there needs to be a service that gives practical support and guides businesses through robust new product development processes to maximise the chances of successful commercialisation.”

Highlighting a Manufacturing Advisory Service West Midlands initiative, she went on: “The MAS-WM New Product Development programme does just this and covers all sectors, and it has been widely acknowledged as a successful scheme. Assistance of this nature is essential if targeted businesses are to streamline and improve their operations through new R&D developments and become more competitive within the global marketplace.”

ii)            R&D

Universities and businesses must work together better to keep the West Midlands at the forefront of advanced manufacturing, according to a leading lobbying organisation.

Responding to a Government consultation on how best to develop the sector, Business Voice West Midlands says that, with more than 300 aerospace companies including Rolls-Royce, Goodrich and Moog, automotive companies of the standing of Jaguar Land Rover, BMW and Nanjing Automotive, along with the likes of digger maker JCB, “the area is continuing to provide a value added contribution to the economy”.

It goes on: “The West Midlands is proud to be the manufacturing heartland of the UK. Its can do attitude and the ability to manufacture products that global markets desire ensures it has maintained its cutting edge reputation.”

But, buffeted by a series of economic shocks including the closure of MG Rover, LDV and the Peugeot plant in Coventry, much more could be achieved.

Welcoming the Government’s establishment of Technology and Innovation Centres, the document notes: “There is a need to do far more to link businesses with the R&D capacity of universities.

“We also need to provide SME’s with support and expertise on how to translate ideas into commercially viable products that customers want to buy.”

Denise Craig, chairman of BVWM’s Manufacturing Policy Development Group, said: “The perception of manufacturing as an outdated force must be changed if we are to develop the talent we need within Britain to help advance the sector.

“This includes manufacturing being spoken of positively in schools and colleges. Low aspirations from young people are deterring new talent from coming into the sector which is why many manufacturing firms have to recruit from overseas. Midlands businesses are frustrated that despite order books beginning to recover since the recent economic downturn, the problems in recruiting local people with the skills to do the job continue.”

It calls for a joined up approach between the Department for Business, Innovation and Skills, the Department for Education, local authorities and schools, without which the UK would “fall behind our major competitors, further inhibiting growth”.

In terms of the supply chain BVWM wants to see encouragement for the cluster approach and a loan guarantee scheme, backed by either the Government or the major manufacturers, in order to minimise risks to lower tier operators. “Payment terms set by higher tier businesses are changing significantly as they seek to use their suppliers as cheap sources of finance – this is particularly prevalent in the automotive sector.”

BVWM says the banks are still not delivering liquidity and condemns what it claims is a shift towards invoice discounting and away from term loans and overdraft facilities – inappropriate when planning for new machinery, for instance. “Therefore, we would encourage the Government to use the Green Investment Bank to get investment moving again into new products and services and also for energy efficiency projects – all areas where conventional banks do not have a good track record in lending.”

But the Government should go further. “A similar approach is also required to address the need for a better understanding within the banking industry of the manufacturing sector as a whole and improve access to relevant and appropriate funding packages.”

However there is praise for Government moves to increase the number of apprenticeships available.

Tax

The Government says it will keep the issue of empty property relief under review, but for the moment can’t afford to act.

The pledge came in a letter to Business Voice WM from the Department for Communities and Local Government.

BVWM has been pressing hard for a re-think on what pundits have dubbed the “bombsite Britain tax”, so named because some owners have resorted to knocking down their own properties to avoid the charge.

Developers across the country are angry that the measure, introduced by the previous Labour administration, is being extended by the Coalition even though the Conservatives condemned it in opposition. It is scrapping rates relief for empty properties with a rateable value under £18,000. From April the threshold for exemption will drop to a rateable value of £2,600. It is reckoned this will pull in an extra £400 million a year.

The development prompted BVWM to write to Communities and Local Government Secretary Eric Pickles pleading with him to consider the long term damage being done to cities.

However, the Government has again insisted that, given the parlous state of the public finances, it needs the money.

It states: “The Government fully appreciates the problems caused by the reform of empty property rates.

“However its ability to take action on this matter will need to be balanced against the overriding need to reduce public expenditure and support the economy generally by reducing the deficit.”

Acknowledging there would be “disappointment” at this stance, it added: “The Government are keeping the current empty property relief scheme under review.”

The DCLG also highlighted help to small businesses.

“The Government has already made small business rate relief more generous by providing eligible small businesses who occupy property with a rateable value of less than £6,000 a 12 month rate holiday.

“More generally the Government are considering the possibility of giving local authorities wide-ranging discretionary powers to grant business rate discounts, so that they can better respond to local circumstances.”

BVWM executive director James Watkins said: “It is at least encouraging that the Government is still keeping this tax under review. Nevertheless this is an iniquitous burden.

“Normally there is some speculative property development to set against the downturn in the economic cycle in the expectation of improved prospects in the future. Such activity has been critical in keeping in place significant local employment and also in helping the general local economy weather these downturns.

“Void business rates have reportedly led to a check on these developments which, in turn, has negatively impacted on growth prospects for a number of local areas. In addition, local businesses who are trying to make ends meet with reduced operations during this difficult economic period are being penalised when, as a result of their initiatives, they are faced with this imposition.”

Crime

Thanks to campaigns run by members of the National Business Crime Forum (NBCF) - which is administered by Business Voice WM - and the small business and retail trade press, over 75 letters have been sent by retailers to their local MPs urging them to join the All Party Parliamentary Group on Retail & Business Crime (APPG-RBC) since letters were sent to retailers on 21st February.

Despite Parliament being in recess for the majority of the time that the campaign has so far been running, cross-party names such as former Leader of the Liberal Democrats Charles Kennedy and Labour members Dave Anderson MP and Dai Havard MP have registered their interest in joining the group - and founding member Mike Weatherley MP’s office has been inundated with enquiries.

Such has been the overwhelming interest in the group that the inaugural meeting has been tabled to take place on Tuesday 29th March between 4:30-5:30pm in Committee Room 16 at the Houses of Parliament.

Retailers who share concerns that government ministers are not taking retail crime issues seriously enough on the policy agenda therefore have until the end of the month to make their local MPs work for them, join the group, and make the government listen to retailers’ serious concerns.

Founding MP Mike Weatherley said:

“It is unusual that an APPG can so swiftly have a buzz created around it, but it is unsurprising that the APPG-RBC has undergone such a swift incubation period between concept and implementation when you consider what a very real and very serious issue retail and business crime is – and how amazing it is that such a group had not been formed already.

It is clear that the Government needs to formally address the anti-social behaviour that threatens the livelihoods of businesses and those who own or work in them.

Industry says that more needs to be done by the government and the APPG-RBC will be the vehicle through which the dialogue is opened between constituency MPs and ministers.”

Chair of the NBCF, and National President of the National Federation of Retail Newsagents, Parminder Singh said:

“Last year saw an unprecedented increase in levels of shoplifting, which has put many a shop out of business and yet remains insultingly considered a ‘victimless crime’; and murders and assaults of shopkeepers in the process of a robbery.

It is nothing less than scandalous that our nation of shopkeepers is under unprecedented levels of threat from anti-social behaviour and yet not one of the main party manifestos even mentioned retail crime. The APPG-RBC will begin the process of addressing this policy blackspot.”

For assistance in writing to your MP, or further information on the group, email info@appg-rbc.com.

Referendum

Liberal Democrat and Labour MPs have united to urge the business community to vote “Yes” in May's electoral reform referendum.

Speaking in Birmingham at a joint meeting of Business Voice WM and the Institute of Directors, Lorely Burt, MP for Solihull and Chair of the Liberal Democrats Parliamentary Party, and Richard Burden, Vice Chair of the Labour Campaign for Electoral Reform and Labour MP for Birmingham Northfield, claimed change would mean all candidates would have to work harder to garner votes.

The MPs were speaking in advance of the May 5 referendum where people will be asked whether or not they would support reform of the voting system for General Elections from First Past the Post to the Alternative Vote.

Prime Minister David Cameron is campaigning against the Alternative Vote but Deputy Prime Minister Nick Clegg is backing what is a method of redistribution based on preferences.
 
Business Voice WM Executive Director, James Watkins, said: “Changes in the voting system would not normally be seen as a business issue. But business people in the West Midlands want to know whether a change in the voting system means candidates would have to work harder to get support – including trying to win business people’s support.
 
“This is the question that our business community will have to consider. We welcome the fact that when it came to electoral reform a coalition MP and an Opposition MP can come together. Now, it is up to those in business to consider which way they should vote in the referendum.”