In his paper, ‘The WM economy needs a public investment strategy for inclusive growth based on social priorities’, Richard Hatcher points out that the Resolution Foundation report. Midlands engine trouble: The challenges facing the West Midlands Combined Authority’, only tells half the story. It defines the problem of the WM economy in terms of the characteristics of the unemployed: low qualifications and skills, and demographic factors – age, ethnicity and gender – and says almost nothing about investment.

The report proposes three solutions:

  • Support groups with low employment rates, shaped to respond to their needs and to overcome the barriers they face, including racial and gender discrimination.
  • Develop an industrial strategy for the WMCA that acknowledges the importance of manufacturing but puts a new emphasis on high-end (defined as technically sophisticated) service jobs.
  • Third, and going hand-in-hand with priority two, the WMCA must seek to retain more of the city region’s graduates and improve skill development more generally.” (p 34)

The third point is based on the claim that there is a skills deficit. While it is true that there are skills shortages in some sectors, it is not true of much if not most of the WM economy.

ukces-coverIn Birmingham for example, according to the government’s UK Commission for Employment and Skills’ (UKCES) Employer Skills Survey, only some 7% of employers say they have hard to fill vacancies due to skills shortages while some 30% say they have staff whose skills are not fully utilised. In other words, under-utilisation of existing skills is a much bigger problem than skills shortages.

The reality is there is no industrial strategy for the WMCA, because that would require a government strategy for investment (a public investment bank, in John McDonnell’s terms), and there isn’t one. Mark Carney, governor of the Bank of England, acknowledges in a recent speech that low public investment by government is one of the problem.

Paul Mason writes: “Carney’s solutions, though couched in language eviscerated in order to avoid offence, boil down as follows […] he says, we have to stimulate growth by relying less on creating money, and more by creating growth: governments have to start using taxpayers’ money to invest, and redesign the economy so that our dire productivity is reversed.“

The fundamental need for investment is almost entirely absent from the Resolution Foundation report’s 46 pages, which is why I say it only tells half the story

There is just one mention: “In recent years the wider West Midlands region and the Greater Birmingham and Solihull LEP in particular have performed strongly on attracting foreign direct investment (FDI), with the third highest number of FDI projects after London and the South East. However, not enough of this has manifested itself in the overall growth figures or […] in employment.” (p14).

But that raises the question, why? Where has this investment gone? What is being invested in? How many good long-term jobs are being created? What social needs are being met? And how much is in prestigious property development for short-term profit?

The crucial issue of investment is ignored in the WMCA’s Strategic Economic Plan (SEP), published in June and written not by the CA itself but by the LEPs. In contrast to the prominence of the need for skills development in the SEP there is virtually no data or analysis at all of current investment in the West Midlands economy.

Yet without investment in new technology and new work processes increasing the qualifications and skills of the workforce only results in more over-qualified workers with under-utilised skills.

The task now for the WMCA should be to draft a completely revised Strategic Economic Plan, drawing on independent expertise, which provides an honest detailed analysis of the current situation of the WM economy, including its gross inequalities of geography, social class, age, gender and ethnicity, and realistic plans and strategies for inclusive growth, a sales pitch based on evidence-free aspirations.

Finally, Hatcher examines the ‘Mayoral WMCA Function’ – an important subject calling for a separate paper.

Read the whole paper here:

And here:

Richard Hatcher

13 December 2016