Executive Director’s Report

                                                September 2009

Business Voice WM was successful in getting remedial action to help the construction sector weather the recession. Council leaders responded to the calls of Business Voice WM by agreeing to roll out next generation broadband access across parts of the West Midlands region. Business Voice WM held talks with the Energy Minister, Lord Hunt. Business Voice WM helped to broker close trade links between Poland and the West Midlands

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.

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.

Broadband

Now is the time to invest in next generation broadband if the West Midlands is to emerge stronger out of recession, it has been claimed.

The call, from campaigner Glyn Pitchford, chairman of a special Task and Finish Group probing development possibilities, came as the City Region board approved an action plan to roll out next generation broadband across the conurbation.

Telford and Wrekin Council, who are part of the project but not members of the City Region, have also approved this plan.

Mr Pitchford, elected Business Voice West Midlands business representative on the City Region board, said: “The decision means that practical work such as lying the right fibre optic cabling should occur during 2010.

“This will mean that the West Midlands along with Telford and Wrekin are one of a handful of areas in the world that can boast next generation broadband – boosting the competitiveness of the region and making it more attractive to major international inward investors.

“It is demonstrating that the City Region and its local authorities are the places of the future.”

The Government, in its recent Digital Britain report, talked of developing universal access at a minimum two megabits per second. But the West Midlands has set its sights far higher. The aim is to get that up to 100 mps by the date of the 2012 London Olympics.

Eight BT exchanges in the region – Fallings Park, Great Barr, Leamore, Northern (Soho, Birmingham), Nuneaton, Tettenhall, Walsall and Wednesbury – are among the latest UK locations due to be upgraded next year. It takes in an arc over the north Black Country which reaches down through Bloxwich and Walsall and touches the northern end of the Jewellery Quarter in Birmingham.

The acceleration of BT’s plans will see 1.5 million UK homes have access to super-fast broadband by early summer 2010. A million of those homes will be hooked up by March, which is a doubling of the original pace of deployment.

The plan is the first chapter in BT’s longer-term programme to make super-fast broadband available to 40 per cent of the UK – or some 10 million homes – by 2012.

In its report the City Region board said next generation broadband would be “fundamental to the economic and social future”.

“One of the noticeable successes has been the increase in collaborative working across the participating authorities and a sharing of good practice,” it noted.

“There are three clear drivers for next generation broadband – business competitiveness, public service transformation, and addressing the digital divide. The Working Party is concerned that the Government is not addressing the issues.”

The report acknowledges the need to act locally. “There is an opportunity for building the requirements for developments to be future proofed for fibre connectivity into common planning guidance across the City Region, making this a requirement in Building Schools for the Future and major public sector funded projects in health and housing.”

It would enhanced business competitiveness and “increase job and life skills for all of the diverse communities in the City Region”.

The report continues: “There is much good work already underway with clear initiatives to build on: Walsall Gigaport, Birmingham’s Digital District, Coventry’s inner city fibre ring, and Telford and Wrekin’s Coalport Innovation Centre. There are clear potential benefits of aggregation of demand as well as sharing costs and expertise collaboratively.

"There is no single solution. There will be a need for innovation not invention, using test-beds and pilot projects. Now is the time to invest to grow out of the recession, demonstrating that the City Region and its Local Authorities are the places of the future.”

Each council should consider and approve strengthened supplementary planning guidance, said the report. All should be in a position to agree the principles by this December.

The City Region also wants to see the development of a training and skills programme that would go alongside this roll out with a target date of April to make a start.

Energy

The energy needs of Midlands businesses will be met – despite continuing fears that the network is not up to scratch, Energy Minister, Lord Hunt of Kings Heath, told Business Voice WM.

But he was urged to clamp down on rogue suppliers arbitrarily raising prices.

In a wide ranging speech at an event held jointly with Birmingham Business School and Forrest Research, Lord Hunt said:

"The Government has taken several key steps to secure our energy supply and reduce carbon emissions.

“The green light has been given to new nuclear power. EDF is preparing to build four new nuclear power stations. At the moment, nuclear comprises 12 per cent of all electricity generation. By the early 2020s, expect this to be a higher percentage.

“We are prepared to support four scaled up coal power stations with carbon capture included. The UK has the North Sea – likely to be ideal to store carbon. And the percentage of electricity generation sourced from renewables has gone from 1.8 per cent in 2002 to 5.8 per cent in 2008.”

Lord Hunt said the Department for Transport was keen to support electric vehicles and high speed rail in the next decade in order to get greenhouse emissions down.

He went on: “More liquidfied natural gas coming into this country, and developing a gas pipeline from the Caspian Sea, is another source of supply.

“We are the sixth largest country in the world in terms of the size of our low carbon economy. By 2015, we can help ensure there are 1.3 million jobs in the sector. Companies are getting involved and there are big opportunities for all of us to take advantage of these commercial opportunities.”

Trade

The Marshall of Lodz in Poland arrived in Birmingham for a two day visit to the West Midlands – with the help of Business Voice WM

The visit marks a step towards a closer working relationship between the two Regions in order to boost regional businesses.

Mr Wlodzmierz Fisiak, Marshall of Poland’s second largest city, will today meet with business leaders at Birmingham International Airport, as well as take a special tour of the new Polish War Memorial, set to be unveiled later this month at the National Memorial Arboretum.

“I first met the Marshall in 2006 when I visited Poland to sign a letter of intent to develop inter-regional cooperation between the West Midlands and region of Lodz, and it is a great honour to now welcome such an important guest to the West Midlands.” said Cllr David Smith, Chairman of the Assembly.

“Our aim is that by working closer together we can help boost local and regional businesses by encouraging cross trade, investment and development, as well as creating strong tourism links. The trip will be made even more special by a visit to the breathtaking new Polish War Memorial at the National Memorial Arboretum.”