Executive Director’s Report

October 2010

The Government offered to work with Business Voice WM to see if the new Local Enterprise Partnerships could work together. The Government’s Electoral Commission responded to the Business Voice WM campaign by proposing that the West Midlands should be allocated an extra Member of the European Parliament. Ministers were told the system of rail franchises should be changed. The Indian and British Governments were urged to take action to allow direct air links between Birmingham International Airport and Punjab. The Government has been told that a power cuts investigation should not be held up.

Local Enterprise Partnerships

Business Voice WM hailed the Government’s decision on local enterprise partnerships (LEPs) as being good for business.

The Government has stated that it will work with business, councils and other partners to consider if a mechanism could be put in place in the West Midlands for co-operation across LEPs to take place – further to the approach that Business Voice WM has been campaigning for.

In addition, Ministers have announced there will be a Sub National Growth Hub in the West Midlands that will be focused on strategic business support – similar to the proposals as put forward by Business Voice WM.

Business Voice WM Chairman, Barrie Williams, said:

“Ministers have seen that our position made sense for business and we are absolutely determined to work positively with partners to make it work.

“What we put forward was in the best interests of the West Midlands and it remains in the best interests of the West Midlands.

“We need to move on from the disagreements that have occurred over LEPs. We should now respect the Government’s decision and ensure we are united in ensuring economic change takes place in the West Midlands”.

“The Government are right to state that these arrangements can be a new start for jobs and growth at the heart of the country. We must not waste this opportunity for change”.

“This arrangement could begin to help support LEPs via economies of scale – so councils can save money. Also, when it comes to supply chains in sectors such as automotive, aerospace and food and drink – which cross the whole of the Midlands and not just a handful of council areas – we can work together to ensure these critical sectors get the support they need”.

“Our proposal of this mechanism – bringing LEPs together – is also in line with the Prime Minister’s Big Society initiative of empowering business and communities to deliver for themselves and move away from the London knows best approach.”

“In addition, the Sub National Growth Hub will ensure the key businesses we need to power our economy forward and create high quality jobs – like the automotive and aerospace sectors – will get the support that they need to compete at the highest level in the global economy”.

“Official figures show that since the heyday of the 1970s – when the West Midlands was seen as the UK’s economic powerhouse – our economic clout has gone into a long decline.

“Unless we pull together then families in the West Midlands cannot enjoy the full prosperity that we should all aim for.

This decision followed the appearance of Barrie Williams before the House of Commons Business Select Committee which was investigating the Government’s policy on LEPs.

European Parliament

Business Voice WM has won its longstanding campaign to get an extra seat for the region in the European Parliament.

The UK was recently allocated an additional place and the Electoral Commission has recommended it go to the West Midlands.

If implemented, it means the West Midlands will be represented by seven MEPs.

Based on last year’s European elections result the new seat would go to Conservative candidate and Herefordshire businesswoman Anthea McIntyre.

Business Voice WM Board member and National Farmers Union regional director, David Collier, led the push.

Business Voice WM Executive Director, James Watkins, said:

“We are very pleased that, despite reports of lobbying by London and Scotland, this extra seat is coming to the West Midlands.

“We have long argued, in the interests of fairness and transparency, this should be the case.

“The West Midlands has a population of 5.3 million – approximately ten per cent of the UK population – yet it currently only has six MEPs representing it, which does not seem to be equitable when, for instance, Scotland, has the same despite an electorate of just 3.8 million while London has eight for 5.2 million.

“There was no doubt in our judgment that the West Midlands – in terms of the ratio between the number of MEPs and population size – has been under-represented and we are pleased this now looks set to be rectified.”

BVWM said the matter had been “an aggravating factor” at a time when difficult economic times persist.

Mr Watkins added: “Europe is a vital influence for many sectors of the West Midlands economy – from manufacturing to farming.

“That is why it is crucial that the region’s voice be heard loud and clear in the corridors of power.”

BVWM said the procedure now was for the Electoral Commission recommendation to go to Constitutional Reform Minister Mark Harper, and, if approved, written into a Bill due before Parliament later this autumn.

“It is not clear how quickly Ms McIntyre will be able to take her seat but we hope any delay can be kept to a minimum,” James Watkins added.

Transport

a)         Rail

Longer franchise deals are one of the key changes needed if the West Midlands rail network is to be brought up to scratch, Business Voice WM has confirmed.

But the lobby group’s rail spokesman Martin Chambers, of the Chartered Institute of Building, urged the Government to retain a major role for Network Rail. The BVWM submission, in response to a nationwide consultation, insisted that franchise changes should not be at the expense of excessive cuts to Network Rail's budget.

Mr Chambers noted: “While the West Midlands business community was once very critical of the performance of Network Rail, it has substantially improved. Delays caused by signal failures, for instance, have substantially declined.

“We positively support the Government’s proposal for longer duration rail franchises. However there are major infrastructure arrangements that would remain uncompetitive for a rail operating company to undertake and where the use of public funds is inevitable alongside longer franchise arrangements to ensure the UK finally has a world class rail network suitable to meet the needs of a world class economy.

“Equally, Network Rail plays a pivotal role in the establishment of the timetables for the entire UK rail network. The importance of this role should not be underestimated and therefore should be protected.

“Business wants a reliable rail network to aid competitiveness.”

BVWM says whatever blueprint the Government comes out with should address stations like Birmingham International that perennially miss out on major investment, and all because the relationship between its franchise operator and Network Rail just don’t work.

The submission states: “Any proposal to extend the life of a franchise should be used as the catalyst for considering a change in the ownership model for stations.

“As a minimum the future model should be predicated on a basis that favours improvements and perhaps therefore changes Network Rail’s position to one of being required to assist and facilitate the development process.

“Birmingham International is an important gateway in to the UK for international passengers from the nearby airport and it is critical that the station is substantially improved so as to more properly reflect its strategic importance. Therefore, the terms and conditions of new franchise arrangements should both include a mechanism that encourages the upgrade of this station but at the same time protects the long term interests of the railway.”

The same principle, said Mr Chambers, could also be applied to commuter stations in the Black Country and across the Midlands so that the quality of service for the customer was improved.

In its submission BVWM also made clear the need for each new franchise to be contractually bound to deliver any improvements that were promised during the bidding process.

As Mr Chambers put it “what we need is a new breed of franchise where the public positively see the franchise holder delivering to at least their original promises” in return BVWM recognised that the franchise holder will of course need to be assured that it will be rewarded for enhancing the asset value of the railway.

b)        Aviation

Business Voice WM has called for a breakthrough in the impasse over direct flights from Birmingham to India.

It has written to Nalin Surie, India’s High Commissioner in London, asking him to use his influence to plot a way forward.

The link was severed in 2008 when Air India switched its Delhi-Amritsar-Birmingham-Toronto service to go via London Heathrow in a move to secure slots there.

Since then, a major campaign to restore a connection has become mired in red tape and regulation.

BVWM executive director James Watkins has requested Mr Surie’s support “in resolving matters”, with the Punjab again being the proposed destination.

Highlighting the close business links between the West Midlands and India, Mr Watkins stated: “Since 2006, more than 1,500 jobs have been created by 16 Indian companies.

There are now over 30 Indian owned businesses in the West Midlands region, such as Tata Motors, State Bank of India, ICICI Bank, Tata Steel, Mahindra & Mahindra and Aditya Birla.

“In addition, the Punjabi community here provides greater economic prosperity for both the Midlands and the Indian economy. Despite these clear economic advantages between our two countries, there is no direct service between Birmingham International Airport and the Punjab. Direct services to the Punjab from a congested Terminal Three at Heathrow Airport lead to additional cost and delays for Midlands business people who wish to travel directly.

“Birmingham International Airport would warmly welcome discussions with carriers to enable such direct services to take place and so complement the decision of Akal Air to ensure there are flights to the Punjab via a transit stop at Vienna.

“It would help tie India and the West Midlands business community closer together. We appreciate that the ability for direct line services to take place is a matter for commercial interests and also for Indian regulatory considerations. In respect of both matter we would be grateful if the High Commission could kindly consider what steps all of us in the Midlands and elsewhere could take which would be to the economic benefit of both of our countries.”

Birmingham International Airport hosts several airlines which run indirect services to India. Among them are Air France KLM, Emirates and Lufthansa.

It has been suggested that three Indian carriers Air India, Kingfisher and Jet Airways might be interested in re-launching a route, but commercial rivalry and regulatory hurdles have prevented any progress despite a 20,000-signature petition being presented to the Indian government.

There are said to be around 350,000 people of Indian origin living in a one hour catchment of BIA.

Power Cuts

Business Voice WM has called on energy regulator Ofgem not to sit on an investigation about power cuts.

The inquiry may not happen until 2015. It is urging the Government to, instead, order an immediate investigation.

The move follows a lengthy campaign in which BVWM has maintained that the frequency and duration of power cuts across the region is hampering industry.

Ofgem insists the problem is in fact getting better where lapses of three minutes or more are involved.

It does not monitor those of less than three minutes but recently promised it would make a start in the current five-year period. “We will be launching a programme of work related to short interruptions to seek better recording and reporting and also to understand customers' experiences and attitudes to short versus long interruptions.”

But BVWM wants action now.

Federation of Small Businesses regional policy unit chairman and BVWM board member, David Caro, cautioned: “They have said they will look at this – but it could happen at any time up to 2015.

“As a consequence, BVWM has written to Energy Minister Charles Hendry asking for this investigation to take place as soon as possible.”

“The problems short interruptions are causing are an added cost burden on manufacturers, particularly those involved in the high tech engineering sector where any supply disruption can cause major IT issues.

“It is a very difficult time for businesses in the current economic cycle when all are trying to work as efficiently as possible.”

Ofgem maintains that since introducing a system of targets, fines and rewards in 2005 the overall performance of operators has “improved”.

In 2009/10 Ofgem fined Central Networks West (CNW) £2.384 million for failing to hit its targets.

CNW was involved in a total of 12,000 incidents. It could face fines of £7.4 million this time around.

Floods

Business Voice WM met with officials from the Government’s Environment Agency to discuss the flood risk in the Midlands. As a consequence of this discussion, it was agreed that the Agency and Business Voice WM would enter into detailed discussions on steps to mitigate the flood risk.

Crime

Business Voice WM with the President of the National Federation of Retail Newsagents, Parminder Singh, held detailed talks with the Home Office Minister, James Brokenshire MP, as to how the National Business Crime Forum and the Government can work together to reduce business crime. Business Voice WM acts as the Secretariat for the National Business Crime Forum.

Economy Talk

Business Voice WM Executive Director, James Watkins, spoke to the Solihull members of the Institute of Chartered Accountants in England and Wales as to the economic challenges facing the West Midlands.