West Midlands Devolution £1.2bn Deal Aims To Spark Up UK's 'Engine'

Leading Business Lawyer Welcomes News But Says More Needs To Be Done

17.11.2015

David Shirt, Press Officer | 0161 838 3094

The Head of Business Legal Services at Irwin Mitchell in Birmingham says that the new devolution deal for the West Midlands will need to be combined with a host of other policies if the region is to genuinely close the prosperity gap between London.

The warning from Chris Rawstron, who is also the firm’s national Head of Corporate, follows news that the region has today signed a devolution deal with the Government which will provide a spending boost of over £1.2bn in spending power over the next 30 years.

Commenting on the deal, Chancellor George Osborne said: “We want to make the Midlands Britain’s engine for growth, and this deal will give the region the powerful levers it needs to make that happen.

“We have worked with local council leaders across the party divide, and today we are announcing a collaborative way of working that would not have been countenanced in this region even just a few years ago.”

The region will receive around £36m a year over 30 years as well as £97m for a tram extension. The deal will see the region take control of policing, skills, business support and transport including bus regulation.

Councillor Bob Sleigh, chair of the WMCA’s shadow board, said: “This is an historic moment for the West Midlands. We have moved incredibly quickly to create the partnership between the seven metropolitan councils and our three LEPs and we are delighted the government has recognised this and has rewarded our ambition with the biggest investment package in the country.”

Expert Opinion
“There has been a lot of talk about the West Midland being the ‘engine’ for the UK economy, but according to our research with think tank Cebr, the economic gap between the West Midlands and London will widen significantly in the next 10 years. Indeed London will grow by 27% whilst our region will increase its output by just 15%.”
Chris Rawstron, Partner

In October, Irwin Mitchell released the findings of its UK Powerhouse report. The in-depth study, which was produced together with the Centre for Economics and Business Research (Cebr), examines whether the Government’s plans to rebalance the UK economy will work.

The report found that if Government policies remained the same, the gap between the West Midlands and London in terms of output and employment will widen in the next 10 years.

Expert Opinion
“This devolution deal is welcome and I’m confident that it will make a difference. It shouldn’t however be viewed as the only answer to bridging the gap between London and the rest of the UK and although our YouGov research found that 48% of business leaders in the West Midlands thought greater devolution of powers would boost economic growth, an even larger proportion thought that a substantial increase in infrastructure would be more effective.

“We believe that expansion in London is a positive thing, but we don’t want it to be at the expense of other cities in the UK. A radical rethink is required and our report highlighted a number of policy considerations including greater involvement of businesses in education policy, devolution of Air Passenger Duty in England and the creation of more enterprise hubs around universities.”
Chris Rawstron, Partner

As part of the UK Powerhouse study, Irwin Mitchell commissioned a YouGov survey of 1,000 businesses to examine the policy measures which the business community themselves think are the best way of boosting regional economic growth.

The survey found that only 32% of businesses in the West Midlands thought the Government had taken the relevant steps to address economic growth.

When asked what the number one priority for helping to support future economic prosperity, 1 in five (19%) of businesses said investment in improved telecoms. Large scale infrastructure projects such as HS2 scored much lower.

The report’s authors, Cebr, recommend a number of policy measures aimed at narrowing the regional divides in economic performance and to ensure the continued growth of existing powerhouses such as London. These include:

1. Further devolution of policies to cities, regions and local authorities
2. Rethinking transport policy with a  greater emphasis on local rail and roads
3. Introducing a regional Living Wage
4. Devolving business rates and considering a land value tax.
5. Tackling housing shortages
6. The introduction of tax competition across regions
7. Greater involvement of businesses in local education policy
8. The establishment of more industry clusters/enterprise zones around UK universities
9. The devolution of Air Passenger Duty (APD) in England