Just as the UK begins to get moving again after a tough period of lockdown, the Chancellor’s recent Summer Statement revealed a further raft of measures aimed at reinvigorating businesses and the jobs market. But, with a large number of measures sitting towards the ‘macro’ end of the spectrum, what do they mean for Birmingham and the wider Midlands and do they go far enough?
The Chancellor’s announcement of a £1,000 Job Retention Bonus for every employee brought back after the furlough scheme ends will be welcome news to many businesses which are wrestling with how to deal with forthcoming end of the furlough scheme. However, with recent data showing that 28 percent of businesses in the region had reduced their headcounts in the last quarter, and the announcement by John Lewis that the flagship Grand Central store will not reopen, it seems likely that tougher times lie ahead.
The West Midlands as a region has one of the highest employment rates in the country, with 75.5 percent of people currently in work. The area is also a key player in the wider Midlands Engine, with a large proportion of the UK’s manufacturing, logistics and professional services capacity based in Birmingham and the surrounding areas. It goes without saying that a significant number of these businesses will have felt the strain of recent months, taking advantage of the furlough scheme where possible.
But is £1,000 per employee enough to get the Midlands workforce moving again? Ideally, we need to be looking at foreign direct investment (FDI). Outside of London, Birmingham ranks only behind Manchester in terms of its attractiveness for FDI, but there is certainly more to be done. Nationally, digital tech is a main driver for FDI and, as part of the West Midlands Industrial Strategy, we should be looking to play to our strengths and boost our capabilities in this field, alongside other areas such as automotive, manufacturing and education. Attracting investment and innovative businesses is crucial in protecting and invigorating the jobs market.
Even with measures such as increased funding for apprenticeships and training and the £2bn ‘Kickstart Scheme’, aimed at getting young people into work, there are likely to be significant job losses in the region and it will take a significant amount of time and investment for new employment opportunities to be created and filter through.
One of the Chancellor’s headline announcements was temporarily raising the Stamp Duty threshold to £500,000, with the aim of getting the housing market moving again. For many people in the process of, or considering, a move, this is hugely positive. Our strengthening position as the UK’s second city has led to an influx of people over the past few years and understandably, all of these people need homes. Raising the Stamp Duty threshold will create fluidity in the market and ultimately support economic growth in the region, helping the local housing market bounce back quickly after the COVID-19 pandemic.
The Prime Minister’s recent ‘New Deal’ also gave us further hope, announcing £84m funding for the West Midlands Combined Authority to build housing schemes on former industrial brownfield sites. This is all further positive news for the region.
While much was said about investing the green economy, detail around further spending on major capital projects was left out of the Chancellor’s Summer Statement. Our city and region is home to some of the most ambitious infrastructure projects in the country and these are proving a major driving force for both the local economy and employment.
HS2 is still being pushed forward, with construction at Curzon Street still ongoing, and the infrastructure required for the Commonwealth Games in 2022 is proceeding. £66m has also recently been allocated by the Government to help start a number of infrastructure schemes aimed at aiding the region’s recovery. This is the type of financial commitment we need to see but while it’s a start, this amount is small change in reality and much more will be needed in the years to come. The West Midlands has so much potential and there is a real opportunity for us to further cement our reputation as a leader in many fields, including transport, life sciences, telecoms and digital tech.
A significant Statement?
The Chancellor’s announcement has, on paper, appeared to deliver on its aims of helping business and getting people back into work. However, we are in difficult times and these measures will not on their own restore lost jobs. Birmingham and the wider region has always been industrious and enterprising – now is our time to all pull together and help create new jobs and prosperity.
Richard Wrigley, partner and head of the Birmingham office of law firm, Shakespeare Martineau