Executive Board Meeting
10am, Friday 29th September 2017
Pera Business Park, Melton Mowbray
AGENDA
1. Apologies
2. Declarations of Interest
3. Minutes of the Executive Board Meeting 27th June 2017 *
4. Midlands Engine
5. Levels of Public Investment in the East Midlands *
6. Infrastructure and Growth * . Midland Mainline Electrification . HS2 . East Midlands Rail Franchise . Midlands Connect
7. Asylum and Refugee Resettlement in the East Midlands *
8. Employment Issues for Local Government – the Regional Employers’ Board *
9. Report of Management Group *
10. Any Other Business
*Papers attached Item 3
EAST MIDLANDS COUNCILS EXECUTIVE BOARD MINUTES OF THE MEETING HELD ON 27TH JUNE 2017 AT PERA BUSINESS PARK, MELTON MOWBRAY
Present: Cllr Martin Hill OBE (Chair) – Lincolnshire County Council Cllr Jon Collins (Vice-Chair) – Nottingham City Council Cllr Neil Clarke MBE (Vice Chair) – Rushcliffe Borough Council Mayor Kate Allsop (EMC Independent Group) - Mansfield District Council Cllr Tom Beattie – Corby Borough Council Cllr David Bill MBE (EMC Lib Dem Group) – Hinckley & Bosworth Borough Council Cllr Roger Blaney (EMC Conservative Group) - Newark & Sherwood District Council Cllr Kay Cutts MBE – Nottinghamshire County Council Cllr Barry Lewis – Derbyshire County Council Cllr Chris Millar – Daventry District Council Cllr Robert Parker (EMC Labour Group) – Lincolnshire County Council Cllr Martin Rawson – Derby City Council Cllr Heather Smith – Northamptonshire County Council Cllr David Slater – Charnwood Borough Council Bev Smith – North West Leicestershire District Council
Stuart Young – East Midlands Councils Andrew Pritchard – East Midlands Councils Sam Maher – East Midlands Councils Matthew Clarke – East Midlands Councils Lisa Hopkins – East Midlands Councils (Minutes)
Apologies: Cllr Craig Leyland – East Lindsey District Council Cllr Tony Mathias – Rutland County Council Cllr Rory Palmer – Leicester City Council Cllr Lewis Rose OBE – Derbyshire Dales District Council Cllr Nick Rushton – Leicestershire County Council
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ACTION Cllr Martin Hill welcomed Cllr Kay Cutts and Cllr Barry Lewis as new members to the Executive Board.
1. Apologies
1.1 Apologies were received as noted above.
2. Declarations of Interest
2.1 Cllr Martin Hill declared an interest in land on the edge of Melton Mowbray – this is a standing Declaration of Interest held on file since September 2015.
3. Minutes of Executive Board Meeting held on 17th March 2017
3.1 The minutes were agreed as a true and accurate record and all actions have been completed or are reported in the papers.
Matters Arising
3.2 Stuart Young informed members that John Edwards, the new Regional Schools Commissioner, has been invited to the AGM.
4. Local Authority and General Election Results
4.1 Cllr Martin Hill, EMC Chairman, introduced this report and members discussed implications of the General Election result. The Rt Hon Sir Patrick McLoughlin is the only Cabinet Minister from the East Midlands.
4.2 In the recent Queen’s speech, no announcements were made in relation to the local authority financial settlement. Members stated that in the absence of any substantive reference to Local Government in the Queen’s Speech, there is a need to go to Government/MPs with asks and solutions.
4.3 Cllr Neil Clarke suggested that very little primary legislation is likely to go through in a hung Parliament. In relation to the Finance Bill, negotiations are taking place as to whether this can be passed as a secondary bill.
4.4 Cllr Heather Smith stated that Northamptonshire have started a consultation on proposals to transfer responsibility of the Fire Authority to the Police & Crime Commissioner. 4.5 Mayor Kate Allsop expressed concern in relation to unsafe building cladding and the
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ACTION amount of money this could cost councils to replace.
4.6 Board Members emphasised their commitment to the electrification of Midland Mainline and expressed concerns that this key infrastructure investment is at risk.
4.7 Resolution
Members of the Executive Board: . Considered the outcomes of the local government elections across the region. . Considered political balance considerations on EMC, and wider the political implications of the county councils elections and WMCA mayoral election. . Considered the General Elections result and any implications for the region.
5. Infrastructure and Growth
5.1 Cllr Jon Collins, Vice Chairman East Midlands Councils, introduced this report and updated members on the recent HS2 Board meeting. At that meeting proposals for growth plan for submission to Government was discussed, along with proposals for the hub station, tram and rail links and links to the airport.
5.2 It was noted that there needs to be a clear vision for housing and transport and that AP additional work is being undertaken with the Universities.
5.3 Further work is also being undertaken in relation to the connectivity to Stanton, AP Staveley and Chesterfield.
5.4 The electrification of MML remains a key assumption, particularly in terms of connectivity.
5.5 Cllr Kay Cutts suggested that now would be a good time to talk to discuss Midland SY Mainline electrification with MPs, emphasising that it should be seen as the first element of Hs2 investment, rather than as a stand-alone project.
5.6 Cllr Roger Blaney updated members on the East Midlands Rail Franchise. The consultation should have started in November 2016, however this is now at least 6 months behind schedule due to factors outlined in the report.
5.7 The new Transport for the East Midlands Board has held its first meeting.
5.8 In relation to Midlands Engine, Cllr Martin Hill stressed the importance that the East Midlands works with the new West Midlands Mayor and also there is a need to be
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ACTION clear about what the Mayor’s initial proposals are. No contact has been made yet.
5.9 The Action Plan will not be presented at the Supervisory Board on 30th June as this is still being worked on. This will be worked on over the summer and presented to a Supervisory Board meeting on the 8th September, and subject to endorsement, then taken through party conferences in the autumn.
5.10 Resolution
Members of the Executive Board: . Considered continued EMC engagement with the Midlands Engine, Midlands Connect, HS2 and the East Midlands Rail Franchise Competition. . Welcomed the first formal meeting of Transport for the East Midlands (TfEM).
6. Asylum and Refugee Resettlement in the East Midlands
6.1 Cllr Heather Smith, Chair Regional Migration Board, introduced this report and updated members on the recent Migration Board.
6.2 The SVPRS remains comparatively well-funded compared to other asylum and refugee programmes.
6.3 The dispersal of asylum seekers is disproportionate across the country and clear pressures have emerged in the East Midlands.
6.4 The Regional Migration Board requested that G4S provide a breakdown of SS nationalities supported in the East Midlands.
6.5 The Compass accommodation contract is coming to an end and the Home Office has been in discussion with EMC to determine the scope of future contracts and the potential involvement of local authorities in these arrangements.
6.6 Syrian resettlement total is now 331. There is a further flight into the region in September, however the families now eligible for resettlement tend to be the more complex cases and have greater resource and support requirements.
6.7 Matthew Clarke presented the costs incurred in support of UASC report. East Midlands is the first region to undertaken this work. The average cost per child per year is £55,153.
6.8 Stuart Young reported that a number of authorities have withdrawn from the NTS MH, JC,
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ACTION due to cost and capacity concerns. A letter from Upper Tier Authorities and Cllr SY Patricia Bradwell (as chair of Children’s Lead Members Group) to be sent to the Home Office Minister and Minister for Vulnerable Children highlighting these issues.
6.9 Members discussed whether this document should now be made public. Stuart SY Young confirmed that local figures will not be released, only the national and regional figures will be available in public reports. Members agreed the need to highlight this document at the LGA/CCN/ADCS networks.
6.10 Members agreed the current position is unsustainable and EMC needs to works with the Home Office in finding solutions.
6.11 Resolution
Members of the Executive Board: . Considered opportunities for greater Local Authority involvement in future contract arrangements for asylum dispersal including delivery of contracts, inspection or strategic scrutiny role. . Noted progress in respect of the Syrian and Vulnerable Children’s refuges resettlement programmes. . Supported an approach with the new Immigration Minister and Minister of State for Vulnerable Children and Families to highlight the shortcomings in the current UASC funding model and to share these findings with the Local Government Association, County Councils Network and the Association of Directors of Childrens’ Services. . Noted the developing work of the East Midlands anti-human trafficking partnership.
7. Employment Issues for Local Government - the Regional Employers’ Board
7.1 Cllr Tom Beattie, Chair Regional Employers’ Board introduced this report and updated members on developments around CEEP UK.
7.2 In relation to the Local Government pay briefing, there is a consultation meeting on 19th July. The Trades Unions are currently asking for 5% across the board increase. The employers’ response is that this remains unaffordable unless additional money is forthcoming from Government.
7.3 Sam Maher reported on the joint work carried out nationally to ensure the pay spine is in line with the national living wage by 2020. There is a need to modernise pay at a way in which is affordable.
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ACTION
7.4 Cllr Chris Millar stated the trades unions need to be made aware of potential job losses if this agreement goes through.
7.5 Cllr Tom Beattie informed members that EMC has given precautionary notice to CEEP to cease membership. However Cllr Beattie would not be able to maintain his role as Vice-President of CEEP if we are not a full member.
7.6 A draft financial plan is being put together by Cllr Beattie, Mick Brodie and Charles SY/SM Nolda in relation to opportunities for the UK post-brexit. A report to be presented at EMC Management Group prior to the end of the year for discussion once the affiliation fee is known and also what the benefits of membership would be.
7.7 Resolution
Members of the Executive Board: . Noted the report. . Provided comments and feedback on the employment issues identified within the report to inform EMC’s input to future Employers’ meetings at regional, National and European level. 8. Report of EMC Management Group
8.1 Cllr Martin Hill updated members from the recent Management Group meeting. EMC liabilities are now all covered in the reserves. Balanced budget is expected for 2017/18.
8.2 Resolution
Members of the Executive Board: . Noted the financial position as part of the budget monitoring ending 31st May 2017 and the associated outturn to 31st March 2018. . Noted the external audit matters detailed in the report.
9. Any Other Business
9.1 Members placed on record their thanks to Cllr Neil Clarke and Cllr Rob Parker who are standing down from their roles at the EMC AGM.
10. Date of Next Meeting 10am, 29th September 2017.
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Executive Board
29th September 2017
Midlands Engine
Summary
The following report provides an update on recent developments in relation to the Midlands Engine, specifically the publication of the Midlands Engine Action Plan and revised governance arrangements.
Recommendations
Members of the Executive Board are invited to: . Consider and endorse the Midlands ‘Engine Vision for Growth’. . Consider and endorse revised governance arrangements including the newly established Midlands Engine Executive Board.
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1. Introduction
1.1 The following report provides an update on recent developments in relation to the Midlands Engine, in particular the publication of the Midlands Engine Action Plan and revised governance arrangements.
2. Midlands Engine Strategy and ‘Vision for Growth’
2.1 On 9th March 2017 the Government set out the strategic framework for the Midlands Engine, with a focus on addressing key productivity barriers through improving connectivity, strengthening skills, supporting enterprise and innovation, promoting trade and enhancing quality of life across the Midlands.
2.2 The publication of both the UK’s Industrial Strategy and the subsequent launch of Government’s Midlands Engine Strategy was a significant step forward in confirming a role for the Midlands Engine. With this came a clear expectation that the Midlands Engine should be a key partner in the delivery of the Industrial Strategy and will develop a credible, focused and achievable Action Plan.
2.3 The development of a Midlands Engine ‘Vision for Growth’ (i.e. the Action Plan - its response to the Midlands Engine Strategy) has required the Partnership to develop and agree a shared set of priorities. Government has challenged us to demonstrate that we are capable of achieving more when we organise as a region than when we act alone – with an emphasis that Government will support us when we do.
2.4 Given the need to respond to Government in a coherent and compelling way, following the meeting of the Supervisory Board in July, Metro Dynamics was commissioned to assist in the completion of the Action Plan. This included developing a consensus view of the Midlands Engine, working across the region, with a wide cross section of partners. In summary, the ‘Vision for Growth’: . Sets out a clear statement of purpose for the Engine, with some underpinning principles and a vision statement. . Establishes 5, evidence-based packages of work, with priorities, which can be developed into firm business cases and implementation plans. . Frames the ambition for Government, in the short, medium and long term. . Details commitments for the £4m of Government support for operating and other costs. . Brings together the views and input from across the Engine. . Offers a platform for further negotiation with Government and for a communications and engagement plan with stakeholders across the region.
2.5 The final draft of ‘Vision for Growth’ was endorsed (subject to agreed amendments) by the Supervisory Board on 8th July 2017, and is attached as Appendix 4(a).
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2.6 In support of the ‘Vision for Growth’, Sir John Peace has written to the Prime Minister to update on the progress of Midlands Engine and to identify agreed priorities for the consideration by Government. The letter is attached as Appendix 4(b).
2.7 This is in addition to planned meetings with the Secretary of State (DCLG) and attendance/fringe meetings at the forthcoming party conferences.
3. Governance
3.1 Since the establishment of the Midlands Engine in late 2015, its supporting governance arrangements have changed to reflect the partnership’s focus and priorities. The publication of the Industrial Strategy, the Midlands Engine Strategy and ‘Vision for Growth’ are significant developments for the Midlands Engine.
3.2 These developments brought with them recognition that the previous, loose governance were no longer adequate. The overall governance model required review in order to ensure consistency, transparency and effectiveness against its roles and responsibilities.
3.3 Revised governance arrangements for the Midland’s Engine were agreed by the Supervisory Board on 8th September 2017. In summary:
a) Midlands Engine Executive Board will be the high level strategic decision making body of the partnership. It will meet on a quarterly basis.
b) The Midlands Engine Business Advisory Board will be the business representative forum.
c) The Midlands Engine Operating Board will be appointed by the Executive Board and will be accountable for the operational management of the Midland Engine programme
d) The Midlands Engine Strategic Programme Groups will be responsible for the delivery of specific parts of the Midlands Engine programme.
e) The Midlands Engine Nomination Committee will lead on governance matters.
f) Midlands Engine Partnership Forum will support consultation and engagement with its members, decision makers and potential investors. It will support the development of strategy and help decide investment priorities.
3.4 It was also agreed to hold an annual Midland Engine conference.
3.5 The previous Midlands Engine Supervisory Board (as replaced by the Midlands Engine Executive Board) provided for 4 local authority leaders from both the East and West
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Midlands; and this region’s representatives were Cllrs Jon Collins, Martin Hill, Nick Rushton and Anne Western.
3.6 The region’s representatives on the newly established Midlands Engine Executive Board; that provides for 3 representatives from both the East and West Midlands, are proposed to be Cllr Martin Hill, Cllr Jon Collins and Cllr Barry Lewis.
3.7 Midlands Engine has appointed an Interim Programme Director with the recruitment for the permanent Chief Executive Officer, Programme Director and other Secretariat roles currently underway. It is anticipated that a full team will be in place by January 2018.
4. Recommendations
Members of the Executive Board are invited to:
4.1 Consider and endorse the Midlands ‘Engine Vision for Growth’.
4.2 Consider and endorse revised governance arrangements including the newly established Midlands Engine Executive Board.
Cllr Martin Hill OBE Chairman East Midlands Councils
10 THE MIDLANDS ENGINE VISION FOR GROWTH Our response to the Government’s Midlands Engine Strategy
11 THE MIDLANDS
Immingham
Grimsby
LINCOLN
Skegness
HS2 Phase 2
STOKE-ON-TRENT
Boston NOTTINGHAM East Midlands A50 DERBY Airport HS2 East Midlands Hub
A49 A5 Stafford HS2 Phase 2 A42 M6
Shrewsbury A5 LEICESTER M42 Telford M54 M6 TOLL
WOLVERHAMPTON M1 Peterborough
Nuneaton BIRMINGHAM M69
HS2 Interchange Dudley Birmingham UK Central (Solihull) Airport M6 Solihull COVENTRY M42 A49 Warwick M5 WORCESTER Stratford-upon-Avon
HS2 Phase 1
HEREFORD
M40 A49 M50 Milton Keynes
A40 Luton
Old Oak Common LONDON
12 THE MIDLANDS ENGINE Vision for Growth 3
CONTENTS
Immingham
PAGE
Grimsby 5 Foreword
6 Executive Summary
LINCOLN 10 We are the Midlands Engine Skegness 14 Strong Foundations for Growth: the Midlands 2017 HS2 Phase 2 16 Looking Beyond the Horizon: the Midlands 2030 STOKE-ON-TRENT 18 Our Vision for Growth Boston NOTTINGHAM East Midlands 20 1. Connect the Midlands A50 DERBY Airport HS2 East Midlands Hub
A49 24 2. Invest in Strategic Infrastructure A5 Stafford HS2 Phase 2 A42 M6 28 3. Grow International Trade and Investment
Shrewsbury A5 LEICESTER M42 30 4. Increase Innovation and Enterprise Telford M54 M6 TOLL 34 5. Shape Great Places WOLVERHAMPTON M1 Peterborough
Nuneaton BIRMINGHAM M69 38 Champion Local Priorities: skills and devolution
HS2 Interchange UK Central (Solihull) Dudley Birmingham M6 Airport 40 Secure Private Sector Investment Solihull COVENTRY M42 42 Build the Partnership A49 Warwick M5 44 Turn this Vision into a Reality WORCESTER Stratford-upon-Avon
HS2 Phase 1 46 Glossary
HEREFORD
M40 A49 M50 Milton Keynes
A40 Luton
Old Oak Common LONDON
13 WE WILL PROVE THAT WHEN THE MIDLANDS SUCCEEDS, BRITAIN SUCCEEDS. 14 THE MIDLANDS ENGINE Vision for Growth 5
FOREWORD
As a Midlander, I know very well how much We have improved our approach to this region has to offer. As a businessman, I attracting foreign investment, published am convinced that the UK’s future economic a credible long-term transport investment prosperity can be driven by Midlands strategy and undertaken the country’s industry, innovation and energy. largest Science and Innovation Audit which emphasises our globally significant assets The Midlands is home to some of the and industry sectors. country’s leading businesses and top talent, and offers an enviable quality of life. The £250 million Midlands Engine In the past, we have performed less well Investment Fund has been launched to than some other parts of the country. provide growth finance to SMEs. This is a Our productivity is lower, some skills are good start, but I want us to go much further. in shorter supply and employment rates I think we need a £1 billion fund to support lag behind. SME business growth as we make real our vision of the Midlands in 2030. Coming together, supported by Government, to form the Midlands Engine Partnership, This vision is our response to the Sir John Peace we have created the opportunity to change Government’s strategy and expresses our things. We have the chance to work, and intent to maximise their return on investment Chair, Midlands Engine to compete, at a scale that makes sense in for the benefit not just of the Midlands, but global markets and to prepare the Midlands the whole of the UK. for a post-Brexit economy. We want to do things differently, working To tackle our under-performance, we need on five priorities which are set out in this to be bold and to do more to improve our vision. Each builds on our track record and productivity and drive economic growth. strengths and will benefit the whole region to a greater extent than any single organisation This is vital to achieving the objective which could achieve working alone. is most important to us – improving living standards, prosperity and opportunity Working collaboratively on these areas of across the Midlands. Inclusive growth focus, and by supporting the achievement requires better productivity and that’s the of local priorities such as addressing skills focus of our partnership. shortages, we will rapidly accelerate growth. Together we can shape our ambition for the We are keen to continue to work with the Midlands of 2030. Secretary of State for Communities and Local Government as our plans develop. In developing this vision, we’ve spoken to By working closely with Government many of our business leaders, innovators, we will rebalance the UK economy by local authorities and LEPs to understand better-connecting the region, investing in their needs and priorities. We will continue our strategic infrastructure, growing our this engagement throughout the autumn, innovative clusters and sectors, increasing with a roadshow targeted at our small and our international investment and trade medium sized businesses. promotion activities, and shaping great The success of the Midlands depends on places to live, work, learn and visit. the Midlands itself, but we need investment, Now is the Midlands moment. Watch us grow. and collaboration with Government, to kick-start and accelerate growth. The prize is huge; if our £207 billion economy were as productive as the UK average it would be a £261 billion economy. The Government launched its Midlands Engine Strategy in March of this year, including a commitment to invest £4 million in our partnership, which we welcome. The strategy is an endorsement of our efforts and highlights the added-value that the Midlands Engine Partnership has delivered since its launch.
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EXECUTIVE SUMMARY
This is the Midlands Engine Vision for Growth. It includes A strong Midlands economy will grow the national our response to the Government’s Midlands Engine economy, attract more investment and rebalance the Strategy and sets out five priorities for investment that will nation. We are already a £207 billion economy with enable the Midlands to contribute to the UK’s Industrial growth of 18% over the last five years, but we are far from Strategy and drive Britain’s post-Brexit growth. achieving our full potential.
We welcome the objectives laid out in the Government’s Midlands Engine partners are committed to collaboration strategy and partners across the Midlands share the across our region to support local and national priorities Government’s aspirations. The £1.62 billion of Local on productivity and industrial strategy. Growth Fund money provided to Midlands Local Enterprise Partnerships has already allowed us to make Our ambition is to close the GVA gap to match or critical investments in infrastructure to improve transport exceed the national average and add £54 billion to and digital connectivity, support skills, unlock housing the Midlands and UK economies by 2030. and business growth and drive civic renewal. The world in which Britain needs to compete and prosper THE MIDLANDS ENGINE is changing rapidly, not just in terms of our trading relationships but also how we produce and consume VISION FOR GROWTH goods and services. Our focus is to look beyond the Investing in the Midlands Engine is essential to the UK’s immediate horizon, towards the Britain of 2030. long-term success. To achieve our 2030 ambition, we need By then autonomous vehicles, artificial intelligence to accelerate productivity growth across the Midlands. based manufacturing, and hyper-fast connectivity Much of this will be driven locally and sub-regionally by will be the norm and HS2 will be up and running. businesses, LEPs, universities, Councils and Combined Authorities with newly devolved powers. This will include In the Midlands, we are planning for this now with strategic delivering a transformation in skills and education that will investments in new energy, innovation and connectivity. help boost productivity and spread prosperity. Critically, we want to ensure that Midlanders have the skills and creativity that will enable them to contribute to, The Midlands Engine is about additionality, complementing and benefit from, these new economic opportunities. the work of Local and Combined Authorities, LEPs, That is how we will achieve more inclusive growth. universities, businesses and others to generate added- value at scale across the Midlands. Our core purpose is to create a Midlands Engine that powers the UK economy Therefore, in this report we focus on the priority areas where collaboration can accelerate growth most rapidly and competes on the world stage. Our and on five packages of work where, by investing and strategic location, strong sense of identity working together, we can add significant additional value to the Midlands and UK economies and play a central role in and reputation as the beating heart of the developing Britain’s post- Brexit economy. national economy will ensure the UK’s These five packages each involve a mixture of immediate future as a global economic power. and longer-term investments and initiatives, the cumulative impact of which will be a step change in productivity and international competitiveness. They are the five main ways we will achieve growth, increase prosperity and improve quality of life for all Midlanders:
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CONNECT GROW INTERNATIONAL SHAPE THE MIDLANDS TRADE AND GREAT PLACES 1 3 INVESTMENT 5 Maximise new technologies to Grow trade and investment in new Promote the Midlands as a great deliver a radical transformation of markets to create jobs in a global place to live, visit, learn and work Midlands connectivity economy Host the 2022 Commonwealth Deliver the Midlands Connect Expand the Midlands Engine Trade Games and a GREAT Exhibition of Transport Strategy and accelerate and Investment Programme the Commonwealth HS2 Explore the potential of an International Secure strategic sectoral Secure full funding for a rail, road and Free Trade Zone relocations: including Channel 4 smart connectivity investment package and The Defence and National Create a regional subvention fund to Rehabilitation Centre Become the UK’s transport innovation attract large events and conferences testbed related to our strengths identified by Support our European Capital of our Science and Innovation Audit (SIA) Culture and UK City of Culture bids Maximise the potential of our two international airports, including through Unlock housing growth, enabling bold new ideas to boost capacity the building of at least 600,000 INCREASE new homes within 15 years INNOVATION AND ENTERPRISE Work with Visit England and Visit INVEST IN STRATEGIC 4 Britain to create and implement INFRASTRUCTURE Create an environment where tactical visitor and destination 2 the strengths identified by the marketing campaigns Science and Innovation Audit Invest in the most sustainable and can be maximised to benefit the advanced technology to deliver whole region, helping to create the infrastructure required to meet successful growth businesses future business and resident needs Work with Government to develop our Invest in our long-term energy security SIA Investment Programme including: Create a 5G digital testbed Transport Innovation, Future Food Processing, Medical Technologies Increase our logistics and freight Innovation and Cross Industry capabilities Technology Exploitation in Clusters Use HS2 as a catalyst for growth, Create a new Midlands Management helping deliver the East Midlands and Leadership Institute HS2 Growth Strategy, the Curzon Masterplan and UK Central Hub Secure National Initiatives, Sector Deals and Industrial Strategy Challenge Fund investments Progress UK supply chain initiatives
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Turn our Vision into Reality
Our immediate next steps will be to build our evidence base, develop an implementation plan and promote this vision across the region.
• Build the evidence base: To understand the complexities of a Brexit-ready economy, we need a robust evidence base. Our partners will create a Midlands Economic Observatory that combines future- scoping and innovation-thinking with rigorous evaluation. We will establish a common framework for assessing the impact of the work we are prioritising and of new economic opportunities as they arise.
• Develop an action plan: The Midlands Engine is agreeing a spending and activity profile for our £4 million Operating Budget. This will include boosting our secretariat team to lead the partnership, committing to communications and promotions activities and assessing the feasibility of new projects. Our next step will be to implement our governance review, develop a distributed leadership structure, with clear responsibility, authority and accountability, to drive implementation of our five work packages, and an assessment of the resource, capacity and capability requirements of each.
• Promote our vision: Working with Government we will run an in-region awareness and promotion campaign to support the launch of the Midlands Engine Vision for Growth. To build engagement and support for our growth ambitions we will run a region-wide roadshow to connect with Midlands businesses this autumn.
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WE ARE THE MIDLANDS ENGINE
The Midlands Engine is a partnership of Local and Combined Authorities, Local Enterprise Partnerships, universities and businesses working together in new and transformative ways to invigorate the £207 billion Midlands economy.
Home to over 10 million people and 440,000 large and small businesses, the Midlands has huge potential and the Midlands Engine Partnership is focused on its global success.
The Midlands economy covers a diverse and substantial area, built on a globally significant advanced manufacturing base, with demonstrable strengths in multiple sectors and technology areas. We are home to world-class research, four Catapult centres, major multi-national research and development-intensive companies and strong supply chains, particularly in automotive and aerospace engineering.
The Midlands economy has grown by 18% over the last five years, slightly higher than the UK rate, but continues to under-perform nationally. We are home to over 15% of UK residents but only just over 12% of the economy. In 2015 productivity in the Midlands Engine area was £7,500 below the national average GVA per worker. Unless our growth increases at a faster rate we will continue to punch below our weight.
No one measure alone will change this. The Midlands Engine needs to focus on a number of issues at the same time if we are to increase productivity, raise living standards, and rebalance the national economy.
20 THE MIDLANDS ENGINE Vision for Growth 11
THE MIDLANDS ENGINE PRINCIPLES The Midlands Engine ways of working are guided by five principles.
• The Midlands Engine is about additionality, complementing the work of Local and Combined Authorities, LEPs, universities, businesses and others to generate added-value at the globally sensible spatial scale of the Midlands
• Our core focus is on leveraging the capacity of the Midlands to help Britain succeed. Our policy approach remains apolitical, focusing on increasing productive economic growth and improving quality of life
• The Midlands Engine will define a long-term strategic plan that will secure a number of high impact initiatives and investments for the UK
• The Midlands Engine will work on projects that benefit the whole region and develop a self-sustaining and resilient partnership model
• The Midlands Engine Partnership will work collaboratively and speak with one voice, implementing a distributed leadership model to drive delivery
Our partners recognise the benefits that can be achieved through decentralisation and devolution. Delivery should always be at the appropriate level and Local Authorities, Combined Authorities and LEPs will often be the delivery vehicles of the inclusive growth we seek.
The Midlands Engine will champion local priorities and ways of working, and forge a common identity based on economies of scale when, for example, promoting the region in world markets or planning regional infrastructure investment.
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OUR GROWTH AMBITION Bavaria, Germany 18% of the national economy The UK needs to increase productivity to be competitive on the world stage 16% of the population and the Midlands must contribute more to UK growth. 15% of national exports Our ambition is to match or exceed the national average GVA per head by 11% of total employment is in high and 2030. If the Midlands Engine were performing at this rate today, the economy medium-high technology manufacturing would be £54 billion larger. That’s almost the size of the Welsh economy. Sector strengths in automotive industries, electrical engineering, Leading international regions that are driving national innovation and mechanical engineering, ICT, productivity such as Bavaria in Germany and the Greater Pearl River biotechnology, transport, Delta in China show what we have the potential to achieve. With similar telecommunications, energy economies to the Midlands, both punch above their weight in terms of their contribution to their national economies. If the Midlands can match them we Munich is Germany’s 3rd largest city can lead the economic transformation not just of the region, but the UK. Greater Pearl River Delta 12% of national economy REBALANCING THE UK ECONOMY 5% of the population 26% of national exports The UK Government believes that if the Midlands succeeds, Britain succeeds. For this to be true we need a step change in the way we work 43% employed in industrial activity, together to tackle barriers to productivity. 55% in services Sector strengths in electronics, Since 2014 the Midlands Engine has received €1.4 billion of European construction, textiles, automotive, Structural and Investment Funds, €245m of Horizon 2020 (to 2016), and pharmaceuticals £1.6 billion of Local Growth Funds. Such investments help to address our Guangzhou is China’s 3rd largest city productivity gap, raise living standards, and rebalance the economy, but we need to do more to become a world-class region which drives UK growth. The Midlands We want to play a central part in discussions with Government about the 12% of the national economy post-2020 funding landscape, identifying priorities for the new Shared Prosperity funding. 15% of the population 15% of national exports The growth enjoyed by Bavaria and the Greater Pearl River Delta is not 38% of total employment is in key down to luck or coincidence. Governments, local bodies, businesses and sectors (those that deliver highest stakeholders have laid the foundations of success, including through secure productivity and attract highest rates investment, for the economy to flourish and to generate more high-value of FDI and graduate employment) economic activity. Sector strengths in manufacturing, We need the security of funding that will allow us to pool resources and transport, energy, construction, invest at scale. An early commitment to continued funding via repatriated food and drink European Union monies can provide this security. Birmingham is the UK’s 2nd largest city
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STRONG FOUNDATIONS FOR GROWTH: THE MIDLANDS 2017
The UK’s leading Meditech cluster, INCLUDING THE Secured the Energy CENTRE FOR TRAUMA RESEARCH ACCELERATOR & DEFENCE MEDICINE
The UK’s largest A globally competitive concentration of SPACE TECHNOLOGY FOOD PROCESSORS & SECTOR SUPPLY CHAIN COMPANIES
AT THE LEADING-EDGE ALMOST 27,500 OF NEXT GENERATION BUSINESSES IN THE transport systems, vehicles, and MANUFACTURING SECTOR technologies globally
585,400 EMPLOYED IN TEACHING EXCELLENCE LIFE SCIENCES AND The Midlands Engine has nearly twice the 246,100 IN ADVANCED UK average of TEF Gold rated universities ENGINEERING SECTORS for teaching excellence
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LAUNCHED THE £250M MIDLANDS ENGINE INVESTMENT FUND AGREED EIGHT ENTERPRISE ZONES
Home to some of the MOST ADVANCED MANUFACTURING EQUIPMENT IN THE WORLD EXCELLENT QUALITY OF LIFE with two UNESCO World Heritage Sites, the National Forest and the Peak District
Midlands Engine Investment Portfolio 33 MAJOR OPPORTUNITIES FOR INVESTORS
MORE FOREIGN DIRECT INVESTMENT THAN ANY OTHER REGION 2011 - 2015 THE HEART OF BRITAIN’S HIGH SPEED RAIL NETWORK
The UK’s largest port by tonnage The only region to have a at Immingham, handling TRADE SURPLUS WITH CHINA 55 MILLION TONNES
In 2016 the Midlands Engine exported over £43BN WORTH OF GOODS, MIDLANDS CONNECT AND IS OUTSTRIPPING THE STRATEGY LAUNCHED 2017 NATIONAL GROWTH RATE
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LOOKING BEYOND THE HORIZON: THE MIDLANDS 2030
THE ECONOMIC ENGINE OF THE UK
We are known globally for our highly productive industrial sectors, research and innovative technologies, with an excellent quality of life that attracts people here to live, visit, learn and work. Our collaboration between institutions and enterprises is renowned.
LEADING CHANGE
Our strength in transport technology and network management means we play a major role in the development of next generation smart-motorways and the digital railway.
A YOUNG AND DIVERSE REGION
20 to 24-year-olds are our largest demographic group, and we continue to celebrate our ethnic diversity and multi-national population.
BETTER CONNECTED WITHIN THE REGION, NATIONALLY AND GLOBALLY
Midlands Connect is maximising the region’s position as the hub of the national transport network, making East to West and North to South journeys easy. HS2 has dramatically shortened some journey times and our two airports and port are continuing to grow as international gateways.
INCREASED NUMBERS OF GOOD QUALITY JOBS
As the pace of automation increases we will see a shift in employment patterns. Our leading work in using advanced technology, digitisation and data, prioritises job creation, supporting entrepreneurs and companies to create new high-value jobs.
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FAR MORE FOREIGN DIRECT INVESTMENT
Through compelling marketing of our strengths, the Midlands is the best place to invest in the UK and to maximise sustainable return on investment.
GREATER NUMBERS OF VISITORS TO THE REGION
Focusing on international and business tourism, addressing issues of under-utilised capacity at the region’s airports, conference venues and hotels.
RISING LEVELS OF EXPORTS
Strong links to global markets, exporting not only products but services and knowledge, maintaining global competitiveness through our adoption of disruptive, innovative new processes in manufacturing.
LEADING THE WAY IN ENERGY INNOVATION
A sustainable and secure region with local clean energy systems. We successfully capitalise on energy storage, demand management, energy services and electrification of transport.
A STRONG EVIDENCE BASE
Our investment in innovation and collaboration around intelligence and analysis of the sectoral impacts of Brexit mean we mitigate risks and capitalise on opportunities wherever they arise, empowered by an ongoing programme of economic and technological foresight work.
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OUR VISION FOR GROWTH
To close the GVA gap by 2030 we must accelerate productivity and boost competitiveness. The partnership has developed our vision focused on the areas where we can add value to national and local work. Our Science and Innovation Audit (SIA) has shaped our thinking and shown where investment can best reap reward.
This is a long-term vision, reflecting both the Government’s Midlands Engine Strategy and our own ambition for the Midlands of 2030.
We have identified five priority work packages. These are the areas where the Midlands Engine will generate added-value through collaboration and drive productivity growth.
Each of these five work packages is based on our known strengths and our potential to contribute more to the UK economy.
In addition to the five work packages, the Midlands Engine has two local priorities, skills and devolution, which will be delivered by Midlands Engine partners.
Skills shortages are a significant barrier to our growth. 31% of people of working age in the Midlands Engine area are educated to degree level or higher, which is significantly lower than the national average. The Midlands Engine also has an above-average percentage of its working-age population without any formal qualifications; 10% compared to a national rate of 8%. Partners are working hard to address these issues, implementing innovative initiatives targeting local skills gaps to meet business needs.
We welcome the £20 million investment by Government in the Midlands Skills Challenge, which will enable us to do more to improve skills in the region.
Devolution can be an enabler for local places to deliver bespoke solutions to local challenges and opportunities to drive inclusive growth. The West Midlands Combined Authority has agreed a devolution deal with Government to work in this way, and we support them in securing a second devolution deal.
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CONNECT THE MIDLANDS
Maximise new technologies to deliver a radical transformation of Midlands connectivity
INVEST IN STRATEGIC INFRASTRUCTURE
Invest in the most sustainable and advanced technology to deliver the infrastructure to meet future business and resident needs
GROW INTERNATIONAL TRADE AND INVESTMENT
Grow trade and investment in new markets to create jobs in a global economy
INCREASE INNOVATION AND ENTERPRISE MIDLANDS ENGINE Create the environment where strengths identified in our SIA can be maximised to benefit the whole region and help create successful growth businesses
SHAPE GREAT PLACES
Promote the Midlands as a great place to live, visit, learn and work
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1. CONNECT THE MIDLANDS
We need to be regionally, nationally and globally connected so that the Maximise new technologies to Midlands transports people to work, goods to market and allows the deliver a radical transformation of exchange of ideas that power the knowledge economy. Midlands connectivity
Everyone does business with the Midlands. Our location means that Deliver the Midlands Connect Transport Midlands businesses have unrivalled access to UK suppliers and Strategy and accelerate HS2 markets, and a choice of routes to export products to Europe, Asia and North America. Secure full funding for a rail, road and smart connectivity investment package Midlands Connect was formed in 2014 to research and develop a strategy for improving transport connectivity across the Midlands Become the UK’s transport to boost economic growth. We are now moving forward across rail, innovation testbed road and smart connectivity, working closely with the Department for Maximise the potential of our two Transport, to modernise and upgrade our transport networks. international airports including through bold new ideas to boost capacity The Midlands is currently held back by poor connectivity and is fragmented into small, poorly connected areas. It takes more than 70 minutes by direct train to travel between our two Core Cities. This is unsustainable in a modern economy. We need high-performing transport networks to fully exploit our locational advantages. With the right investment Midlands Connect will deliver those networks.
Government has already committed to invest £5 billion over the course of this Parliament in Midlands transport infrastructure. We are capitalising on emerging technology; autonomous cars will soon be seen on the streets of Midlands cities, with Coventry one of the host cities in a trial of self-driving vehicles and connected car technologies.
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DELIVER THE MIDLANDS CONNECT TRANSPORT STRATEGY AND ACCELERATE HS2 We are seeking Government prioritisation of, and commitment to the delivery of, the whole of the Midlands Connect Strategy and we urge Government to bring forward the completion date of HS2 Phase 2 to 2030.
As the first region to benefit from HS2, the Midlands Connect Partnership is seizing this once in a lifetime opportunity to drive UK growth, and we are fully supportive of Sir David Higgins’ report, HS2 Plus, which proposed that HS2 Phase 2 be accelerated.
Delivering the Midlands Connect Strategy is crucial to transforming the Midlands into a well-connected region. Investment and delivery must keep pace with the development of our programme and deliver on additional initiatives in line with Government’s Transport Investment Strategy.
Our transport strategy will boost the economy by up to £5 billion per year by 2040, creating a total of 300,000 new jobs. We take a bold new approach to connectivity that will reduce congestion and improve journey times across the Midlands through a joined-up approach to infrastructure improvement and investment. It sets out a twenty-five-year transport investment programme and identifies a package of early priorities requiring delivery in the next decade.
Bold ideas include developing the A46 as a cross-region corridor running south-west to north-east across the Midlands. This is a key strategic priority because of the scale of the potential economic, trade and housing growth it can stimulate. It is a major development, with the potential to link the South West and South Wales and the ports of Bristol and Immingham, with the logistics golden triangle at the heart of the Midlands, and onwards to the North East.
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OTHER PROJECTS Midlands Rail
We are seeking £40 million funding to further support our Rail Programme to help ensure that the region has well progressed plans in place to cope with growth and take advantage of economic benefits. This will build on the £5 million announced in the Autumn Statement of 2016, when Government supported us to develop our rail ambitions. It will include developing Phase 2 of the Midlands Rail Hub, both the east-west and Coventry-Leamington corridors, and establishing a new Rail Innovation Group.
Electrification of the Midland Main Line is seen by residents and businesses as important in reducing journey times and ensuring HS2 compatibility. The recent announcement not to proceed with the electrification was met with concern. The objective of improving journey times and achieving HS2 compatibility must still be met. With that in mind, and because we want to be the UK’s transport innovation testbed, the new Rail Innovation Group we propose to establish will develop ideas to deliver a high-specification rail service for the Midlands, one which could be matched across the UK.
Midlands Road
We are seeking £15 million to move forward with our Midlands Major Road Network and Midlands Motorway Hub initiatives. Midlands Connect is currently undertaking work aimed at defining the purpose and characteristics of a potential Major Road Network for the Midlands and has commissioned, jointly with Highways England, the Midlands Motorway Hub Study to identify how capacity constraints are restraining the economy of the Midlands and the UK.
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Smart Connectivity Maximise the potential of our airports
We are seeking £24 million to take forward smart ticketing The Midlands is home to two international airports. They are programmes, including capital expenditure to install platform key assets for the Midlands and we want to maximise their validators where needed at railway stations across the potential as global gateways for both passengers and freight. Midlands. We support the national Smart on Rail programme As part of the emerging UK Aviation Strategy, we will identify and believe that the Midlands can develop the most efficient ways to better support their growth, and develop bold options way to deliver and integrate regional and national programmes. to increase capacity and maximise connectivity to our airports from across the region. This will stimulate competition to Become the UK’s transport ensure our people, businesses and customers have a wide innovation testbed choice of airports, airlines and destinations. This could include direct links to our HS2 stations or the use We want the Midlands to be the testbed for future transport of innovative new technology such as a hyper-loop between innovation and are keen to work with Government and the airports. universities to develop pilots and help take ideas from concept to delivery. This includes using technology to reduce the need to travel, connected autonomous vehicles and Network Rail’s digital railway ambitions.
Midlands Connect will play its role in encouraging a market for innovation and smart connectivity, for example as an operating environment for connected and autonomous vehicles, where the region has an input into the conditions required to implement these initiatives including infrastructure, regulation, operating models and insurance risks.
By leading growth in technology from the Midlands, including driverless cars or piloting platooning of freight vehicles, the UK can become a global centre of excellence for the application of these technologies in a sustainable environment where defined standards and legal and regulatory boundaries can be established. This will enable manufacturers to produce globally-accepted products, driving accelerated market demand and economic growth. In addition, this will help to achieve our transport outcomes.
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2. INVEST IN STRATEGIC INFRASTRUCTURE
We will accompany our comprehensive strategy to deliver the UK’s best Invest in the most sustainable and transport system with a series of innovative programmes to deliver the advanced technology to deliver energy, digital and logistics infrastructure that the region’s businesses the infrastructure to meet future require. We will also benefit from new national infrastructure projects, business and resident needs where the Midlands will be at the heart of HS2. Invest in our long-term We are already building on Midlands strengths in research and development, energy security and the presence of leading energy technology and engineering firms to support Government in shaping future energy policy and delivery. We are Create a 5G digital testbed home to the Energy Research Accelerator (ERA) and the Energy Systems Catapult whilst Rolls-Royce is leading a UK consortium looking at the Increase our logistics and freight potential application of nuclear energy from Small Modular Reactors. capabilities Use HS2 as a catalyst for growth, helping deliver the East Midlands The Energy Research Accelerator is a collaboration of six Midlands HS2 Growth Strategy, the Curzon Innovation universities plus the British Geological Survey. These Masterplan and UK Central Hub institutions are working with industrial partners ranging from Jaguar Land Rover and Schlumberger, through to small and medium sized enterprises such as Dearman, Blueprint and many others. The ERA’s large-scale demonstration projects take place across the Midlands and provide practical and applied solutions in areas such as energy for homes and communities, energy storage, energy generation and distribution, and carbon abatement.
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INVEST IN LONG-TERM ENERGY SECURITY We will bring together our research and industry expertise to create the most advanced UK region for testing, demonstrating and commercialising new energy innovations and become the best place for businesses and residents to access affordable and sustainable energy. Our diverse urban and rural landscape provides opportunities to test and deploy technologies, at scale, across different environments.
Through collaborations such as Energy Capital we seek to achieve bold ambitions including eradicating fuel poverty across the Midlands. We support Government’s ambition for the UK to have the lowest energy costs in Europe. We will also support Government’s future energy policy by creating the largest testbed and commercial market for innovative energy technology in the UK.
In many cases the business objectives of one party in the energy sector cannot be satisfied without the data, levers of control and customer relationships held by other parties. The consequences are unnecessarily high costs for domestic, industrial and commercial consumers and very high barriers to securing sustainable energy supplies. This is partly a product of regulation and partly a product of the energy sector being behind other sectors in exploiting advanced information infrastructures.
Market efficiency can drive up consumer satisfaction and drive down cost. But the private sector alone cannot unlock this. There are fundamental market failures to overcome. New industrial energy demonstrators focused on low cost, clean energy can stimulate new markets for energy supply.
We have identified a pipeline of projects for investment which will see the Midlands developing pre-commercial stage innovation capabilities and stimulate early-stage technology innovation, building on our strengths in battery technologies, housing and construction.
We are asking Government to support the creation and expansion of energy demonstrators across the Midlands, supported by programmes such as the Energy Research Accelerator and partnerships such as Energy Capital, and the development of Energy Innovation Zones to go beyond demonstration, to market-making and large-scale commercialisation of integrated energy systems, in support of UK Industrial Strategy.
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OTHER PROJECTS Use HS2 as a catalyst for growth We will work to support places to turn their ambitious Next steps to develop the 5G HS2 Growth Plans into action. HS2 can transform the digital testbed Midlands. This is most impactful when we see HS2 as part of wider regeneration plans and a regional transport We want to be at the forefront of digital innovation and network. We will look to link the development areas are working across the Midlands to develop a detailed across the four stations serving the Midlands and secure and costed proposition to make the Midlands the UK opportunities for all our residents and business. testbed for 5G and full fibre networks. We are keen to work with Government on this as set out in the Midlands • The East Midlands HS2 Growth Strategy plans Engine Strategy. We will focus on a small number of key to use HS2 in the East Midlands to create an challenges where Midlands Engine partners have existing extra 74,000 jobs and generate an additional £4 strengths and expertise. Our ambition is to deliver the billion of GVA by 2042. The development has the technological infrastructure that will attract and support potential to be truly transformational, catalysing businesses and residents, and to address issues such growth across and beyond the East Midlands as congested transport networks, energy systems under capacity strain, and elderly and isolated vulnerable people • The Curzon Masterplan for Birmingham city who need support. centre will catalyse regeneration with a new rail terminus in the heart of the city. It is anticipated As a first step, we are defining a testbed area where to generate a £1.5 billion economic uplift, create technology is already in place or could be readily 36,000 new jobs and 4,000 new homes assembled to enable deployment of a test architecture capable of coping with the most demanding of • The UK Central Hub in Solihull is a unique applications. We are assembling a group of stakeholders concentration of global businesses and strategic which includes technology and connectivity suppliers, economic assets with a wide range of development research bodies, Local Authorities and other major service opportunities, including the HS2 Interchange providers to take this forward. Station, the 140 hectare Arden Cross development site, Birmingham Airport, the National Exhibition Increase our logistics and Centre and Jaguar Land Rover. The whole development will create around 3,500 homes, freight capabilities support an estimated 100,000 jobs region-wide and contribute £5 billion to regional GDP We would like Government commitment to one or more of the Heathrow Logistics Hubs being located in the Midlands, In addition to the three main HS2 hubs within the Midlands maximising the presence of national logistics operators Engine, there is a major opportunity to align these with in the region. The transportation and storage sector in HS2 at Crewe. The Constellation Partnership there has the Midlands employs 228,000 people in over 21,000 ambitious plans to deliver new homes and jobs growth. businesses. We will continue to explore how to increase employment and business opportunities in logistics and freight, maximising the export and import capabilities of the Port of Immingham, Birmingham Airport and East Midlands Airport as the UK’s premier freight hubs. They have great potential to support economy rebalancing efforts and to relieve congestion at Heathrow.
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3. GROW INTERNATIONAL TRADE AND INVESTMENT
In 2017, we undertook our first collective promotion of the Midlands at Grow trade and investment in new MIPIM, an international property event in Cannes, France. We developed an markets to create jobs in a global Investment Portfolio for the Midlands and showcased the breadth and scale economy of the investment opportunities available here. Expand the Midlands Engine Trade and This was a successful first step. We will build on this and take the Midlands Investment Programme Engine to multiple global investment events in 2018, including MIPIM Explore the potential for an International Asia. We will work with private sector partners and the Department for Free Trade Zone International Trade (DIT) to showcase the Midlands Engine Investment Portfolio at these events. Create a regional subvention fund to attract large events and conferences We are working together to increase foreign direct investment (FDI), boost related to our strengths identified by our international presence and develop a combined offer at the scale which our Science and Innovation Audit is attractive to major investors.
The Midlands Engine Investment Hub, based in Birmingham, is now successfully driving inward investment in key sectors and supporting regeneration projects across the region.
Working with DIT, in addition to our MIPIM exhibition presence, we have undertaken trade missions and are developing our emerging China Strategy and our Life Sciences capability brochure.
We are forging new relationships based on our SIA identified strengths, such as the Memorandum of Understanding designed to strengthen the collaboration, particularly in the cyber sector, between the Midlands and Maryland in the USA.
We want to work with the region’s businesses and international partners to raise awareness of the Midlands Engine and develop new areas for collaboration to secure maximum benefit. We have an ambition to be the trade engine of the UK economy, actively engaged in the USA, Commonwealth and other opportunity markets. With direct connections and interactions with China we can become The End of the Silk Road.
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EXPAND THE MIDLANDS OTHER PROJECTS TRADE AND INVESTMENT Prepare for the post-Brexit trade opportunities; PROGRAMME an International Free Trade Zone feasibility A threefold increase in investment by study Government in the Midlands Engine trade and Working closely with Government we would like to maximise investment programme will allow us to deliver international trade and manufacturing exports post-Brexit. This would include investigating the potential for a Midlands pilot of an increased international trade and investment International Free Trade Zone (FTZ) that could operate at region activity post-Brexit. level perhaps close to an existing freight hub. The first step is a feasibility study on the potential of FTZs in the UK. They appear We will increase the scope of the current programme, including an attractive proposition for the Midlands given their potential to the implementation of target market interventions, and repeat the facilitate and increase cross-border trade by removing obstacles success of MIPIM 2017 in other markets over the next few years. imposed by customs regulations, but the opportunities and risks of this approach are currently untested in the UK. We want to broaden our understanding of specific geographical areas and sectors to focus Midlands Engine trade and investment efforts in target markets, based on maximising traction from A new regional subvention fund to attract current geographical links and existing and emerging sector international conferences and events related strengths. to Science & Innovation Audit strengths In addition, we will develop new functions which can benefit We are asking for a £40 million subvention fund, over two years, the region and prepare for the post-Brexit landscape. We seek to attract major events that meet criteria related to the Midlands freedom to use the Midlands Engine branding in all markets. Engine SIA. This will build the capability of the Midlands to be a world player in strength sectors, to create capacity and to prepare We will use this additional funding to a medium-term project to bid for the World Expo. deliver four functions: Individual places in the Midlands have powered the business 1. Introduce a new approach to large event economy since the opening of the National Exhibition business account management Centre, building on a central, easily accessible location to develop event support infrastructure, including hotels and convention 2. Create a world class inward investment function bureau operations. We want to enhance this, for instance with a refreshed Investment Portfolio assessing the capacity we have to attract more major conferences and the potential to create new facilities. 3. Increase international promotion for FDI, trade and exporting through an increased programme Investment is required to develop a Midlands Engine programme of outreach activity, both physical and virtual managed by a co-ordinated conferencing and business visitor hub of strategic value to the region, resourced through a Midlands 4. Explore the potential benefits of a Midlands Soft Conferencing desk. This investment would lead to improved Landing Zone for the post-Brexit Midlands International Congress and Convention Association rankings, attracting more events and international business visits, and an ability to target events that support the priorities for Midlands Engine FDI.
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4. INCREASE INNOVATION AND ENTERPRISE
We are committed to ensuring that our businesses and universities are at Create the environment where the centre of Industrial Strategy thinking and implementation. We extend to strengths identified in the Science Government the offer for the Midlands to develop a regional dimension for and Innovation Audit can be implementing the national Industrial Strategy. What we do as the Midlands maximised to benefit the whole matters, but so too does our involvement in national work. We are home to region, helping to create successful many national centres, such as Catapults, and our world-class companies growth businesses lead key national programmes and pilots. Develop the SIA Investment We must support and engage Midlands businesses to strive for excellence Programme including: Transport and success that will ultimately deliver our goal of greater prosperity for Innovation, Future Food Processing, all. We are known for our manufacturing and engineering strengths, but Medical Technologies Innovation and we need more of our firms, including SMEs, to see innovation as a part of Cross Industry Technology Exploitation their core business. Developing the role of Growth Hubs is important to in Clusters strengthen the business support offer, using innovation to boost growth Create the Midlands Management and and productivity. Leadership Institute Building on our unique assets and historic strengths we will raise Secure National Initiatives, Sector productivity. The SIA identifies the competencies and capabilities which Deals and Industrial Strategy Challenge are necessary in a globally competitive market. The enabling competencies Fund investments of Advanced Manufacturing and Engineering, Digital Technologies and Data, and Systems Integration underpin and support much of the Progress UK supply chain initiatives innovative business activity across our region. The coverage of these competencies is not unique to us, but we have a critical mass of assets and expertise in these areas. As set out earlier, we would like Government to support the creation and expansion of demonstrator assets, such as ERA, Energy Capital and development of Energy Innovation Zones. We view the SIA as a living document which we will regularly update, ensuring it reflects new and emerging thinking and strengths.
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Across the broad innovation landscape, We are alert to individual funding opportunities as they arise, but we want to deliver swiftly in the next few critical years. This the SIA also identified four Market-Driven can only happen through a concerted Midlands Engine and Priorities: Government effort working with Innovate UK and others to agree a package of investments. 1. Next Generation Transport: covering aerospace and space, automotive, motorsport and rail sectors, We have developed a strong pipeline of innovation projects, advanced materials and processes, and digital which we want to discuss with Government. Implementing this manufacturing, supply chain and service management pipeline will exploit Midlands-specific strengths, position the region as a strong technology leader, protect and grow current 2. Medical Technologies and Pharmaceuticals: covering markets, and diversify manufacturing supply chains. medical devices, diagnostics (including in-vitro diagnostics and diagnostic imaging), software The projects included in the pipeline are collaborative, involving as a medical device, and pharmaceuticals a number of Midlands partners. Each project addresses a business or market need, and has strong evidence of industry 3. Future Food Processing: covering the areas of food or public-sector partner co-creation or participation. processing efficiency, delivering a zero-waste food chain, and food product innovation in the food and drink sector The initial investment of £169 million will 4. Energy and Low Carbon: covering geo-energy, support delivery of the first stages of the thermal energy systems, nuclear, energy storage innovation pipeline as outlined here. and smart integrated energy systems 1. The Transport Innovation Accelerator We will build on significant innovation strengths DEVELOP THE SCIENCE of the Midlands to create a globally-competitive & INNOVATION AUDIT innovation infrastructure, deliver technology INVESTMENT PROGRAMME solutions and strong supply chains 2. Medical Technologies Innovation Accelerator We are asking Government to work with us We will harness the unique industrial base, patient population and academic-NHS partnerships in the to secure the funding necessary to support Midlands to create the UK’s leading excellence cluster delivery of the opportunities identified in for the development of Medical Technologies the SIA through an integrated innovation 3. Future Food Processing Accelerator pipeline. In the first two years this will require We will build on existing regional strengths in £169 million, which we will match-fund from food and drink manufacturing, deepening key capabilities, creating new opportunities for Midlands Engine partners. growth and building the future talent pipeline
Since launching the SIA we have identified a wide range 4. Cross Industry Technology Exploitation in Clusters of innovation projects which, taken together, will ensure we We will follow a small-company-innovation model are world leaders in our SIA priorities and result in improved developed and tested by our Midlands business productivity, delivering at scale, with large company support. clusters, to stimulate small companies to exploit All the proposed projects will be 100% match funded by horizontal technology transfer between industries Midlands partners.
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The Midlands leading role in sector priorities is OTHER PROJECTS demonstrated by key strategic commitments from Government. This includes investment in Nottingham Midlands Management and for energy and low carbon, and for automotive the Leadership Institute establishment of the Advanced Propulsion Centre.
Our response to one of the issues set out in the In Leicester, we are aligning our place-based investments Government’s Industrial Strategy Green Paper is to deliver with existing space sector deal priorities to grow UK a Midlands-wide response to management and leadership capability based on Midlands SIA strengths. challenges in enterprise. Various national programmes complement and synergise We will focus on our small and medium sized businesses to with our integrated innovation pipeline, such as the explore how we can create a Midlands Mittelstand model. innovation element of the construction sector deal, This is the type of highly productive and technology-driven and the Space Park project. We seek funding to develop SME economy seen most often in Germany. Mittelstand projects in these areas, and would like to talk further businesses prioritise workforce skills development and with Government. For example, the Infrastructure Industry apprenticeships. Innovation Platform is working with the Manufacturing Technology Centre and The UK Collaboratorium for We know that many of our universities and training Research on Infrastructure and Cities, supporting the providers already deliver high-quality provision in this national programme, to develop a technology roadmap space, with many accredited to the Government’s Small for the whole infrastructure sector. We are also involved Business Charter. We plan to map this further, to look at in the Low-Cost Access to Space Driving Data Services good practice and to establish any gaps in provision. initiative at Leicester Space Park, which will bring high We will then design a new training model to effect real volume production of satellite spacecraft to the UK and change in the way SMEs with scale-up potential are led, will locate the Midlands as a global centre for commercial managed and grown. exploitation of space-enabled data. Midlands strengths in advanced manufacturing and space engineering make Secure National Initiatives, Sector Deals us the right place to deliver this initiative, developed by a and Industrial Strategy Challenge Fund consortium of universities, industry and LEPs.
As part of the Industrial Strategy consultation, Government Progress UK supply chain support announced its offer to strike new sector deals. A proposal for a Ceramics Deal, focused around North Staffordshire, We support the National Manufacturing Competitiveness has already been submitted. We look forward to seeing Levels framework. The Midlands Engine has a lot to this progress, as well as working with Government to offer in both the formulation and delivery of programmes agree new sector deals to deliver the Industrial Strategy. designed to better support supply chain companies We will also prepare proposals based on our strengths to on their competitiveness and growth journeys. We are bid for the Industrial Strategy Challenge Fund. actively engaging with the national groups leading these discussions in aerospace, space, automotive, rail and other key manufacturing sectors to contribute to the development of proposals. In parallel, we will establish an environment in the Midlands that is supportive of implementation of national programmes or frameworks with regional delivery.
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5. SHAPE GREAT PLACES
The cities, towns and landscapes of the Midlands boast unique identities Promote the Midlands as a great dotted with reminders of the region’s rich heritage. We want to promote our place to live, visit, learn and work regionn i a new way that is valuable and meaningful for local people and visitors, attracting more businesses, investment and tourists to the region. We will build Host the 2022 Commonwealth on examples such as existing work between partners and Visit Britain and Visit Games and a GREAT Exhibition of the England to develop Midlands-wide propositions to attract more visitors from Commonwealth target markets and to create itineraries which showcase the best of our region. Secure strategic sectoral relocations: Channel 4 and The Defence and We have welcomed public and private sector decisions to relocate and expand National Rehabilitation Centre in the Midlands; decisions by firms such as HSBC, IBM and Siemens. We want to build on this, rebalancing the UK economy through the clustering Support our European Capital of of connected organisations, including private sector businesses, and the Culture and UK City of Culture bids relocations being orchestrated by the Cabinet Office through the One Public Estate programme. Unlock housing growth, enabling the building of at least 600,000 new Our partners are working to ensure we have housing supply to meet future homes within 15 years demand. A commitment to enhancing the quality of life of those who live, learn Work with Visit England and Visit and work in the Midlands is driving our ambition to create great places with Britain to create and implement quality, well designed housing. tactical visitor and destination marketing campaigns The West Midlands Combined Authority, cities such as Stoke-on-Trent, Derby, Nottingham and Leicester and other designated growth areas all have track records of using innovative delivery vehicles to tackle the challenges of redeveloping their brownfield sites, which often have significant contamination, and of delivering housing growth in slower markets.
We are continuing the ambitious regeneration of our city and town centres, including the re-purposing of some of our former industrial areas through major programmes such as the 25,000 home Black Country Garden City, as well as the creation of new places such as the Garden Villages planned at Long Marston in Stratford-on-Avon, Spitalgate Heath in South Lincolnshire and Infinity Garden Village in South Derbyshire.
New approaches across the Midlands are bringing forward housing sites. Successful joint ventures with public-private partners sharing risk have unlocked homes on brownfield sites, former coalfields and former NHS hospital sites. Partnerships with major developer-investors such as Harworth Estates and Urban and Civic are unlocking key sites at scale in growth areas, including Rugby Radio Station and land south of Newark. Local Authority Housing Companies are now delivering programmes of homes for market and affordable products, for example the Birmingham Metropolitan Housing Trust, Nottingham City Homes, Wolverhampton’s WV Living and in Stoke-on-Trent. A number of other authorities have recently set up companies and have agreed investment and delivery programmes.
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HOST THE COMMONWEALTH GAMES IN 2022 AND A GREAT EXHIBITION OF THE COMMONWEALTH The Midlands Engine strongly supports Birmingham’s bid to host the Commonwealth Games which will have transformational benefits for the whole of the Midlands.
The Games present an unprecedented opportunity to engage our young and diverse population in welcoming the Commonwealth to Birmingham, the Midlands and the UK with pride, creating a legacy of community cohesion, improved health and well-being, and enhanced ambition. It will enable us to showcase the UK’s second city and wider assets of the Midlands, and to use the Games to accelerate investment and growth, generating significant economic benefit.
Beyond the opportunity to support Birmingham’s bid, we would like to host a GREAT Exhibition of the Commonwealth in 2022 to celebrate the Commonwealth’s economy and attract new trading and investment partners. We will explore the potential for new facilities to host this. In the run up to 2022, we will host two regional events to showcase Midlands cultural and tourist attractions and increase economic ties with other Commonwealth countries, linked to our increased trade and investment activity and innovation strengths.
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OTHER PROJECTS Develop a combined destination offer We want to work with Visit Britain and Visit England to Secure strategic sectoral relocations develop tactical marketing campaigns, increasing both and developments overseas and domestic visitors. This will develop a combined Midlands tourism offer, starting with the international We are championing bringing Channel 4 to the Midlands. Mayflower 400 celebration in 2020 that will mark the 400th Analysis by partners shows that relocation could generate anniversary of the crossing of the Mayflower Pilgrims to the £2.3 billion between 2021-2030, and another £2.7 billion New World. indirectly. We believe our central geography, quality of life and property offer makes us the strategic location The tourism and cultural assets of the Midlands act as a of choice. powerful magnet, combining easy access to England’s second largest city, rural adventure and rich cultural We want to open a conversation with Government about itineraries, all underpinned by true English heritage. arms-length bodies relocating to the Midlands too. The sector contributes £8.7 billion and rising to the Midlands economy. We seek a £50 million capital investment in the relocation and development of the Defence and National We will drive this growth, utilising the skills and expertise in Rehabilitation Centre as it moves to the Stanford Hall the region’s existing network of Destination Management Estate. Locally we are investing in the detailed business Organisations, collectively promoting the many visitor case and securing planning consent. Significant capital economy tourism assets. We will also explore the potential funding will be required to accelerate adoption in civilian for a visitor economy shared apprenticeship to address care of innovative medical technology emerging from sector-identified skills shortages. defence medicine.
46 THE MIDLANDS ENGINE Vision for Growth 37
Support our cities to become UK City Unlock housing growth, with at least 600,000 of Culture 2021 and European Capital of new homes over 15 years
Culture 2023 Our partners will work innovatively with Homes England and The Midlands Engine backs the ambitious bids from our cities others to establish local support packages which co-ordinate to showcase culture and heritage, attracting investment and and pool public sector investment and other interventions growth. Both Coventry and Stoke-on-Trent have made the to unlock key strategic housing sites. Midlands partners are shortlist for the 2021 UK City of Culture and Nottingham is preparing proposals for the Housing Infrastructure Fund, vying to be European Capital of Culture in 2023. Winning these which the Midlands Engine supports, to unlock and accelerate events for the region will enable the Midlands to use culture housing growth at scale. as a catalyst for economic and social regeneration, and raise There is a pressing need to boost the supply of new homes the profile of our arts, culture and creative economy across the in the Midlands to attract and retain dynamic, skilled and country and continent. We will enhance our creative sectors, flexible workers who can drive productivity and growth and so attract increased business investment and boost tourism. contribute to the creation of successful places. We recognise the imperative to rationalise the supply of employment land so that we create opportunities to grow employment, whilst freeing up surplus land for residential development. Local Plans set out where the major growth will be delivered and the infrastructure necessary to unlock these sites. Allied to this, we are preparing for a multi-billion pound infrastructure investment in HS2, including three new stations at Birmingham Curzon Street, UK Central and East Midlands Hub, and related investment in the Constellation growth area around Stoke-on- Trent. This will be a once-in-a generation stimulus to economic and housing growth in the Midlands.
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CHAMPION LOCAL PRIORITIES: SKILLS AND DEVOLUTION
STRENGTHEN SKILLS Strengthening skills is one of the priorities of the Government’s Midlands Engine Strategy. The mismatch between business skill needs and resident skill levels is a big productivity challenge. This message has been delivered repeatedly by major employer groups such as CBI, FSB and IoD, whose members all cite skills as a major barrier to economic growth.
Across the Midlands, places are undertaking activity to address skills issues at every level of the labour market, including implementation of the activity outlinedn i the Government’s strategy. We champion the local delivery of skills and employability programmes, and welcome the £20 million investment in the flagship Midlands Skills Challenge. We also look forward to further work across the Midlands with the Department for Education to create a network of Institutes of Technology.
There is no one-size-fits-all solution to the skills challenge. This is why individual areas have been undertaking Area Based Reviews, and why skills features highly in Midlands LEP Strategic Economic Plans and in the West Midlands Combined Authority devolution deal negotiations.
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Across the Midlands we are undertaking Our understanding of business need, both for skills replacement and future demand, is incomplete. We will create a wide range of activity to raise skill levels new Collaborative Skills Networks to share best practice, work including: together on skills and listen to the needs of businesses. These will bring together industry representatives and • The £20 million Midlands Skills Challenge stakeholders to influence the future delivery of skills in the region. These networks will assess the skills needs of the region’s • A commitment to deliver 750,000 apprenticeships businesses and signpost to where policy and funding could • The National College for High Speed Rail, opening support further growth. They may also identify opportunities or in September 2017, with a hub in Birmingham future projects to support existing work and ensure Midlanders have the skills needed for the jobs of the future. • Piloting of Department for Education identified Opportunity Areas in Derby and Stoke-on-Trent to address educational outcomes and social mobility DEVOLUTION AND
• The ongoing Productivity and Skills Commission LOCAL DELIVERY linked to the West Midlands devolution deal We ask Government to work with all Midlands areas as they • LEPs such as D2N2 developing Skills identify new local delivery mechanisms, implement their and Employability Portals Strategic Economic Plans, and develop local industrial strategies to address the needs of local economic development. • Investment in Midlands school infrastructure through the Priority School Building Programme A core aim of the Midlands Engine is to rebalance the economy, and local areas are looking at bespoke devolution propositions • Scoping a digital skills strategy, aligned which will create stronger economies across the region. We with the 5G testbed support these developments.
• Business participation in developing the The Midlands Engine is committed to supporting local areas new apprenticeship standards in their negotiations with Government about increasing devolved power and funding and creating new structures to • Strong collaboration across our universities, including serve communities better. We welcome the commencement through the Midlands Enterprise and Midlands of a second round of devolution talks with the West Midlands Innovation partnerships, to improve higher level skills Combined Authority. The economic geography of the West Midlands is a principal driver of growth, and the Midlands Engine is proud to be home to Birmingham, the UK’s Second City.
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SECURE PRIVATE SECTOR INVESTMENT
The private sector will be a significant driver of growth in the region, stimulating innovation and promoting the Midlands overseas. It is critical that businesses can access necessary finance. Where there are currently gaps in the investment landscape we are creating funds to support growth.
Increase the Midlands Engine Investment Fund
The British Business Bank has announced the first wave of its £250 million Midlands Engine Investment Fund, with the launch of £120 million of SME debt finance and small business loans. This fund has been created collaboratively by the British Business Bank and the nine Midlands Engine LEPs plus the South-East Midlands LEP. This is the first time Midlands LEPs have pooled their resources and collaborated on this scale to meet the financing needs of micro and smaller businesses.
The fund will offer a mix of debt and equity finance to smaller businesses across the MEIF area. Government estimate that this will support over 1,400 smaller businesses and help to create approximately 3,800 jobs. In the process, the MEIF will encourage entrepreneurship in the Midlands and seek to address structural challenges in the Midlands SME finance market.
This is a good start, but we need to go further to achieve a step change in growth for the Midlands. We plan for a second, larger MEIF2 with a total fund value of £1 billion.
Around £100 million of MEIF1 is from European Regional Development Funds. We will look at alternative sources of funding for MEIF2, such as repatriated European funds and will explore options with Government.
Long-term capital fund
The Midlands Engine Investment Fund includes £20 million for early-stage investment. We welcome this investment and the opportunities the fund provides. However, this fund is not sufficient to support the large number of technology start-ups we need to drive growth in the region. We have identified this as a barrier to the creation of new technology start-ups, and we are working with the private sector and institutional funds to provide the necessary investment in the region.
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BUILD THE PARTNERSHIP
GOVERNANCE AND MANAGEMENT Since it was established in 2015, the Midlands Engine has delivered key priorities, such as the Midlands Connect Strategy, the Science and Innovation Audit, and the Midlands Engine Investment Fund. The ambitious vision set out here will require us to step up to a new level of activity. Our governance review will put in place management and delivery structures that are fit for purpose. Our Principles will ensure that we are consistent in our approach and decision making.
As we evolve into a more established organisation, focused on the five work packages set out in this vision, we will develop an open and transparent way of working. We will sometimes need to make difficult decisions around prioritisation and funding. This will include reviewing our resource, capability and capacity requirements and how delivery can be achieved through a distributed leadership structure, with clear responsibility, authority and accountability.
We will be accountable both to partners and to Government, and our governance review will be quickly implemented to ensure we can deliver in a collaborative and agile way.
We want to broaden our reach and ensure that the private sector is involved in a meaningful way so that it can influence the agenda to bolster the region’s competitiveness. Building on the proposals in the Government’s Midlands Engine Strategy we will explore potential models for equipping business with a powerful voice.
We look forward to taking this forward, for example by establishing a new Industry Board bringing together the Chair of the Midlands Engine, the Secretary of State for Communities and Local Government and key business leaders. There is also the opportunity for the Midlands to take an approach to business engagement similar to London First.
In order to make the most of the funding granted by Government, the Midlands Engine Partnership will maximise match-funding secured from partners. This will both support the core activities of the partnership and the development of particular projects. We will create opportunities for the private sector to get value from their contributions and ensure a broad-based funding system.
To make our vision a reality we are recruiting a new Executive Team. Our new Chief Executive and Programme Director will provide strong leadership in driving, delivering and communicating the Midlands Engine Partnership’s programmes of work. A Midlands Engine communications campaign will help secure a high-level of positive recognition and promote engagement and active involvement across the region.
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BUILD THE EVIDENCE BASE To understand the complexities of a Brexit-ready economy we need a robust picture of the Midlands both now and in the future, using evidence to focus delivery. We will evaluate what we are doing to see what works and learn from this. Good policies and effective decisions must be underpinned by the best and most up-to-date information possible. For these reasons, we want to create the Midlands Economic Observatory.
The region is already home to a variety of economic observatory bodies. We propose to draw from their work to build a framework which supports an agreed economic observatory model at a regional level. We want to undertake the UK’s first place-based sector assessment of the potential impact of Brexit, including consideration of spatial elements and impact on each LEP area and the two Core Cities in the Midlands.
We will start to measure the economy of the Midlands using an agreed set of indicators to allow better reporting to Government on the additional impact of policy change and investment activity. This will create the evidence base we need to inform the key interventions that will be most effective in accelerating growth. It will also play a critical role in evaluating how funding has been spent and what returns have been achieved.
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TURN THIS VISION INTO A REALITY
This vision sets out the work packages and priority projects of the Midlands Engine and the Midlands Engine Partnership’s response to the Government’s Midlands Engine Strategy.
It is the result of an unprecedented level of collaboration with businesses and Government. Senior stakeholders have come together as never before under robust governance arrangements.
It sets out our intent to collaborate across the region to enable the Midlands of 2030 to be the engine of the UK economy.
In the coming months our incoming Chief Executive and the Midlands Engine Partnership will develop the detail that turns this ambition into reality with the support of Government.
Our Operating Budget, including the £4 million from Government for the next two years, will be used to fund a fully resourced secretariat, deliver marketing and communications activity and, as agreed by the Midlands Engine Executive Board, to prioritise projects and develop business cases.
We have been grateful for the support of senior Ministers and we welcome the Secretary of State for Communities and Local Government working with us on our exciting plans as the Minister for the Midlands Engine and our champion in Government.
We have set out in this vision our bold direction of travel and the role of the Midlands in supporting the Government’s Industrial Strategy, both in the short term and in the post-Brexit world, confident that when the Midlands succeeds, Britain succeeds.
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GLOSSARY
CBI Confederation of British Industry
DIT Department for International Trade
ERA Energy Research Accelerator
FSB Federation of Small Businesses
FDI Foreign Direct Investment
FTZ Free Trade Zone
GDP Gross Domestic Product
GVA Gross Value Added
HS2 High Speed Two
IoD Institute of Directors
LEP Local Enterprise Partnership
LGF Local Growth Fund
MEIF Midlands Engine Investment Fund
MEIH Midlands Engine Investment Hub
SIA Science and Innovation Audit
SME Small and Medium Enterprise
Photography courtesy of Rolls-Royce, Toyota, The Manufacturing Technology Centre and HS2 56 57 W: midlandsengine.org
T: @midsengine
September 2017 58 Item 4 (b)
Midlands Engine C/o Nottingham City Council Loxley House Station Street Nottingham NG2 3NG 18th September 2017
The Rt. Honourable Theresa May, MP Prime Minister Office of the Prime Minister 10 Downing Street London SW1A 2AA
Dear Prime Minister
Midlands Engine Vision for Growth
As Chair of the Midlands Engine, I want to share with you our Vision for Growth, which marks a step- change in the Engine’s evolution and sets out our ambition, and priorities. This is our plan for a post- Brexit Midlands at the heart of the UK economy and the Industrial Strategy.
In March 2017 we were pleased to receive the Midlands Engine Strategy, which set out your Government’s priorities for the Midlands. During the intervening period, colleagues across the partnership have worked to bring forward our major projects and investments. We have undertaken joined-up international investment promotion at MIPIM, started work on a China Strategy, agreed a cyber-security Memorandum of Understanding with the U.S. State of Maryland and invested £20 million in the Midlands Skills Challenge Fund. Importantly during the same period, Andy Street has been elected Mayor of the West Midlands and I was delighted to learn that the Midlands Engine will continue to benefit from the support and engagement of the Right Honourable Sajid Javid MP, your Secretary of State for Communities and Local Government.
Our Vision for Growth identifies five areas where we will develop detailed work plans for the next two years and beyond and where we will leverage match-funding from across the region. These are Connect the Midlands; Invest in Strategic Infrastructure; Grow International Trade and Investment; Increase Innovation and Enterprise; and Shape Great Places. We will use the £4 million announced by Government in March to provide core capacity for the Engine, to communicate our work, engage our stakeholders and develop our projects.
I would like to draw your attention to some of our priorities, for consideration in the forthcoming Autumn Budget where we want work with Government to:
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Support the Government’s ambition for HS2, using it as a driver of economic growth
Create the Midlands Innovation programme and invest in the next phase of Midlands Connect (our visionary integrated transport programme)
Enable the building of 600,000 new homes across the region in the next 15 years
Support development of the National Manufacturing Competiveness Levels proposal (referred to in the Midlands Engine Strategy as the Midlands Manufacturing Productivity Programme) to strengthen the UK supply chain
Secure the Commonwealth Games for Birmingham
Support the West Midlands Combined Authority’s next devolution deal. In addition, we set out two areas in the document where we are working to respond locally.
Across the Midlands we underperform on skills, but we are home to some of Britain’s best companies. We want to address this mismatch, and will create sector skills networks to understand the future needs of our businesses.
We are supportive of devolution and we want to work, in a complementary way, to support further proposals and models for devolution, understanding its potential to stimulate growth and local engagement.
This Vision for Growth is the product of considerable engagement with our businesses. I am personally committed to an enhanced level of business engagement. Working with Sajid Javid MP, I will establish an Industry Board to provide the senior business voice for the Midlands Engine. I expect this to be a positive but challenging forum, opening up new opportunities for growth and skills development, particularly post-Brexit.
We are also listening to our small and medium sized enterprises, the bedrock of our business base, and in the autumn will work with the Midlands Engine Local Enterprise Partnerships to present this Vision to businesses and secure their support. In addition, we are planning our second trade mission to China; as always, there is an open invitation to you and any of your Ministers to join us.
I look forward to receiving your views on our Vision for Growth. I am proud of what we have achieved so far, and confident of the Engine’s future as a means to significantly grow this region’s and the nation’s economies.
Yours sincerely,
Sir John Peace, Chairman, Midlands Engine.
Cc. The Right Honourable Sajid Javid MP, Secretary of State for Communities and Local Government.
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60 Item 6
Executive Board
29th September 2017
Infrastructure and Growth
Summary
This report updates members on HS2 in the East Midlands, the Midlands Connect initiative, and the latest position on the East Midlands Rail Franchise competition - including the cancellation of MML Electrification. These issues were considered at a meeting of Transport of the East Midlands (TfEM) which took place on the 12th September 2017.
Recommendations
The Executive Board is invited to:
. Consider the latest developments on HS2 in the East Midlands, Midlands Connect, and the East Midlands Rail Franchise Competition – including the cancellation on MML Electrification. . Welcome the work of Transport for the East Midlands (TfEM).
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1. Background
1.1 This report updates members on HS2 in the East Midlands, the Midlands Connect initiative, and the latest position on the East Midlands Rail Franchise competition, including the cancellation of MML Electrification. All these issues were considered at a meeting of Transport of the East Midlands (TfEM) which took place on the 12th September 2017, chaired by Sir Peter Soulsby.
2. HS2 in the East Midlands
2.1 Following the meeting of the HS2 Strategic Board on the 26th July 2017, which considered the draft Growth Strategy, the Executive Team has been working to: . Make the amendments agreed by the Strategic Board. . Upgrade and amend the diagrams to print quality standard as part of a wider professional re-design of the document. . Prepare for a press launch on the 25th September 2017.
2.2 The Growth Strategy, attached as Appendix 6(a) is structured around the following: . People . Place . Connectivity . Delivery
2.2 The people section summarises earlier work on the scale of the economic prize, the challenges of planning for ‘generation z’ and the key elements of our skills and supply chain strategy.
2.3 The place section articulates a clear strategic context for using HS2 to add value to existing strengths and assets across the East Midlands and sets out ambitious proposals for new high quality mixed use development based around two ‘growth zones’: . East Midlands Hub Growth Zone: focused on the proposed Hub Station ‘innovation village’ development and ‘garden village’ proposals at Stanton and Chetwynd Barracks. . Northern Derbyshire Growth Zone: focused on improving access to Chesterfield station as a gateway to the town and surrounding visitor attractions, and using the Staveley IMD to drive forward the regeneration of the wider corridor.
2.4 The connectivity section sets out a strategic approach to linking people and growth opportunities to the HS2 network from the strategic right down to the
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very local, and integrated into our emerging designs for the Hub Station, the ’innovation village’, and the areas around Chesterfield station and Staveley.
2.5 The delivery section summarises the ‘key moves’ from all three sections necessary to implement the growth strategy, and the immediate asks of Government required to safeguard future opportunities, including the necessary provisions in the Phase 2b Hybrid Bill.
2.6 The Growth Strategy is supported by a range of technical documents, including a commercially sensitive business case document aimed at Government analysts, which is nearing completion.
2.7 The publication of the Growth Strategy represents an important milestone in the Strategic Board’s work – but in reality it just represents the start of a much longer implementation phase. The key immediate priorities are set our below:
a) Establishing a Shadow Delivery Body
2.9 To provide the focus and critical mass necessary to drive forward the implementation of the Growth Strategy the current informal partnership will need to move to a more substantive arrangements. A meeting of council leaders chaired by Cllr Cutts will take place on the 25th September to discuss potential options. A business case will be made to secure £5m over 5 years through the Chancellor’s 2017 Budget to support the establishment of a ‘shadow delivery body’.
b) Securing the necessary provisions in the Phase 2b Hybrid Bill and Environmental Statement
2.10 Work to develop the provisions of the Hybrid Bill and the Environmental Statement describing the Bill scheme will take place primarily over the next 12 months. It will be important to ensure that there is maximum complementarity between the Growth Strategy and the Government’s proposition, to minimise the need to secure changes to the Bill through the Parliamentary petitioning process. An initial meeting with DfT/HS2 to discuss the Hybrid Bill will take place on the 18th September 2017.
c) Further development and refinement of business cases
2.11 Development of the commercial and business case for the Growth Strategy and individual key moves will need to continue. Midlands Connect has already undertaken a business case for a classic compatible link at the Hub Station – but further work will be required. The East Midlands Gateways Connectivity Plan
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(Phase 1) will be key to delivering the strategic transport priorities set out in the Growth Strategy. 3. Midlands Connect
3.1 Following the publication of the Midlands Connect Three Year Plan, this report updated Members on two key areas of work which are currently underway: . Development a Major Road Network for the Midlands . Transition of Midlands Connect to a Statutory Sub-National Transport Body
a) Major Road Network
3.2 Following the publication of an independent report by the Rees Jefferys Road Fund in 2016, the Government has committed to the establishment of a ‘Major Road Network’ (MRN) for England. The MRN would cover the busiest and most economically important ‘A’ roads that are not currently managed by Highways England. It would form a ‘middle tier’ of roads between the national Strategic Road Network (SRN) and local roads which would continue to be managed by Local Transport Authorities.
3.3 DfT is proposing to allocate a proportion of the National Roads Fund to the MRN. Press reports have suggested that this could be in the region of £1 billion per year across England. This would represent additional cash to Local Transport Authorities.
3.4 Where they exist, the Government will seek the advice of emerging Sub-National Transport Bodies like Midlands Connect to define the MRN for a given area. As a result, Midlands Connect has begun a study which will look to establish: . The make-up of the MRN within the Midlands, and in areas close to our borders. . The role the MRN plays in the current economy of the Midlands. . The role the MRN will play in the forecast growth (economy and housing) of the Midlands. . Identify those roads in the Midlands MRN which provide a nationally important role. . Identify the opportunities for collaboration across Local Highway Authority areas and the Strategic Roads Network around setting standards for operational management, information/data sharing and future proofing. . Identify and prioritise those roads within the MRN most in need of future investment.
3.5 Whilst this technical work is at an early stage, Transport Directors have considered initial options for the East Midlands element of a MRN might look like. A further report will be discussed at the next meeting of TfEM on the 1st
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December 2017 and form a collective input into both the Midlands Connect work and the Government’s consultation.
b) Statutory Sub-National Transport Body
3.6 The previous Government made a commitment to establish Midlands Connect as a statutory Sub-National Transport Body by the end of 2018, similar to the status proposed for Transport for the North.
3.7 Whilst the current voluntary arrangements have been successful, the Government’s Transport Investment Strategy published July 2017 highlights the added value of statutory status:
“….This unprecedented access to investment decision making is only possible as a result of STB’s unique role as the single voice for their region and the legitimacy that statutory status gives them to prioritise potential investments based on their regional transport strategies” (para 4.23)
3.8 Following two well attended member workshops and discussion with transport directors from across the Midlands, and initial proposition for a Midlands Connect STB has been developed with the following functions (which are also consistent with the Transport for the North proposition):
. To establish a statutory regional transport strategy for the Midlands which must be recognised and formally responded by central Government and its delivery agencies, and by councils within and adjoining the Midlands.
. To establish recommended priorities for major road and rail investment in the Midlands, which the Department for Transport, Highways England and Network Rail would have to have regard to when setting their investment strategies.
. To identify a ‘Major Road Network’ (MRN) for the Midlands to complement the national network managed by Highways England, to establish its role and purpose to the regional economy and set desirable standards for operation and potential applications of future technology.
. To work with Local Transport Authorities, Combined Authorities and other bodies (such as West Midlands Rail and EMC) to specify the development and delivery of rail franchises and to be a statutory consultee on changes to services which are wholly within or run through the Midlands Connect area.
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. To act jointly with the Local Transport Authorities and Combined Authorities to create multi-modal ticketing schemes to cover the whole or any part of their combined areas (subject to the Bus Services Bill).
3.9 However officials have subsequently made clear that despite the strong policy commitment, the necessity for secondary legislation and the priority given to Brexit means there will be insufficient Parliamentary time to establish Midlands Connect as a statutory STB before 2020. In addition, at the last meeting of the Midlands Connect Strategic Board, at least one local authority leader expressed scepticism about the move to statutory status.
3.10 As a result, officers have been working with DfT officials to develop a revised timetable for progression towards statutory status and including interim steps that would help build political confidence. These might include a period of ‘shadow running’ of a full STB, and the establishment of more formal joint working with Highways England along the lines of the ‘Highways North’ arrangements.
4. East Midlands Rail Franchise Competition
4.1 The Government published the East Midlands Franchise Competition Prospectus on the 16th of November 2016. The document contains a summary of EMC’s position (page 20) as agreed by the EMC Executive Board in April 2016.
4.2 To provide a clear mandate for engagement with the Department for Transport and bidders, the EMC Executive Board agreed the following documents, available on the EMC website at: http://www.emcouncils.gov.uk/East-Midlands Rail-Franchise
. EMC Strategic Statement which sets out regional objectives for new franchise. It is based on an initial document discussed at stakeholder consultation event in Newark in April 2016, subsequent comments from key stakeholders and further consideration with local transport authority rail officers and transport directors.
. EMC Social Value Statement which sets out social, economic and environmental objectives for the delivery of the franchise under powers contained in the Public Services (Social Value) Act 2012. It has been informed by the existing social value statements of local transport authorities.
4.3 The Government published the formal consultation document on the 20th July 2017 - 8 months later than originally planned. The document sets out the
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Government’s vision for the next franchise and asks a series of detailed questions on what should set out in the specification against which operators will bid.
4.4 The document also confirms the Government’s decision to cancel the electrification of the Midland Main Line through Derby, Leicester and Nottingham. Instead, the Government wants to explore the potential of using bi-mode rolling stock and ‘alternative technologies’ to achieve benefits similar to high speed electric trains – although it is not clear how these services would be compatible with HS2.
4.5 As a consequence of the delay to the consultation, DfT has also had to:
. Re-run the ‘expressions of interest’ phase for franchise bidders. Originally three operators had been shortlisted to bid for the franchise. Re-running the exercise may lead to more or fewer operators coming forward; and
. Make another direct award to the existing franchise holder (East Midlands Trains) of 6 months, which would mean the next franchise starting in late 2019.
4.6 The consultation document sets out 30 consultation questions covering all aspects of the future franchise. A response to each has been developed based on the earlier Strategic Statement and Social impact Statement, and following further engagement with local transport authorities and other stakeholders – including those in adjoining areas. Cllr Roger Blaney has provided political oversight on behalf of the EMC Executive Board.
4.7 The combined response was agreed by the TfEM Board on the 12th September 2017 and is available on the EMC website at: http://www.emcouncils.gov.uk/East-Midlands-Rail-Franchise
5. Cancellation of Midland Main Line Electrification
5.1 The Government’s decision to cancel, rather than postpone, the full electrification of the Midland Main Line was announced on the 20th July 2017 - the day before the summer Parliamentary recess and just prior to a statement from the Secretary of State supporting Crossrail 2 (estimated to be £30bn+ in today’s prices). The written statement to Parliament by the Secretary of State for Transport, The Rt Hon Chris Grayling MP is available here. The key points include:
. The [Midland Mainline] upgrade will enable reduced journey times and more seats for long distance passengers during the peaks, as well as more capacity
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for commuters with dedicated services with longer trains. Journeys will improve from 2020 and, once the full benefits are realised, there will be almost twice as many seats into London St Pancras in the peak compared to today.
. The next [franchise] operator will be required to deliver modern, fast and efficient trains. This includes a brand new fleet of bi-mode intercity trains from 2022, delivering more seats and comfort for long-distance passengers.
. The provision of these trains will replace plans to electrify the line north of Kettering to Sheffield and Nottingham, improving journeys sooner, without the need for wires and masts on the whole route, and causing less disruption to services.
. We do not intend to proceed with plans to electrify the line from Kettering to Sheffield and Nottingham, and there will be further investment to come to ensure Sheffield is HS2-ready.
5.2 All the indications are that the business case for the full electrification of the Midland Main Line remains strong. It would significantly reduce the running costs of the railway, reduce CO2 emissions, improve air quality and enable the faster acceleration and deceleration of trains. It would also promote the future integration of the HS2 and classic rail networks by enabling classic compatible running. At the time of the cancellation, it is understood that the project was being implemented successfully within the agreed budget and timescales by Network Rail.
5.3 In response to the Government’s announcement, EMC issued a press release, attached as Appendix 6(b) and a letter requesting an urgent meeting with the Secretary of State also involving the Chair of Midlands Connect Sir John Peace, attached as Appendix 6(c). As yet, EMC has not received any response from DfT and no date for this meeting has been confirmed although dialogue with senior officials is continuing.
5.4 The concerns are primarily:
a) We are not aware of any examples elsewhere in the world were alternative fuels have been used to power inter-city trains (i.e. 125 mph) on a commercial basis. Bi-mode for the East Midlands in 2022 is therefore likely to mean electric and diesel, which means a continuation of diesel traction throughout most of the region – including the Air Quality Management Areas in Derby, Leicester and Nottingham - for the foreseeable future.
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b) It is not at all clear that electric/diesel bi-modes can deliver the same level of performance as high speed electric trains or make the most of the line speed improvements now being implemented on the MML. Bi-modes are heavier as they have to carry an additional power unit and fuel, and experience from the Great Western Line suggests they can struggle to deal with gradients and take longer to accelerate/decelerate. There is also no evidence that bi- modes bring the reliability or reduced track/wheel wear and tear that an all- electric fleet can deliver.
c) Electrification would appear essential for running HS2 classic compatible services - which is why the Government is committed to electrifying a small part of the Erewash Valley Line and the MML north of Clay Cross by 2033 to allow Sheffield to be served by HS2 classic compatible trains. Provision for HS2 classic compatible services serving Leicester is a key part of our vision for HS2 in the East Midlands. It is not at all clear that bi-mode trains could deliver the same level of performance as HS2 classic compatible trains.
d) The current 40 year old HSTs will become non-compliant with regulations on disability access and emissions in 2020 - at least 2 years before the new bi- modes are planned to enter service. We are unclear on the proposals of Government for dealing with this 2 year gap.
e) The cancellation of electrification will inevitably have an impact on jobs and businesses, particularly in the rail engineering sector - which is heavily represented in the East Midlands. We would like to discuss Government proposals for working with our rail sector to maintain investor confidence and drive innovation.
f) The case for electrification remains strong. Electric trains are cheaper to run, quicker, more reliable, quieter and less polluting than the alternatives – which is why HS2 will use electric traction. In addition, it would appear the Government remains committed to the de-carbonisation of the economy and to addressing air quality.
5.5 The TfEM board advised that a ‘twin track’ approach that combines continued engagement through the franchise process to secure service enhancements where possible with a vigorous campaign to secure reinstatement of electrification.
5.6 As a result, the following actions have been undertaken or are proposed:
. A meeting to scope out Parliamentary response was held with key regional MPs on the 14th September 2017.
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. Officers are reviewing available evidence to produce a revised briefing note on the wider benefits of electrification. . TfEM agreed write to the Chair of the Transport Select Committee seeking an inquiry into the decision. . TfEM agreed to promote a major summit on the ‘Future of Transport in the East Midlands’ before the end of 2017.
6. Recommendations
The Executive Board is invited to:
6.1 Consider the latest developments on HS2 in the East Midlands, Midlands Connect, and the East Midlands Rail Franchise Competition – including the cancellation on MML Electrification.
6.2 Welcome the work of Transport for the East Midlands (TfEM).
Cllr Jon Collins Vice Chair of East Midlands Councils Executive Board - Infrastructure
Cllr Roger Blaney Executive Board - Rail Franchise Competition
76 Item 6 (b)
NEWS Release from East Midlands Councils Release Date: 20th July 2017
MIDLAND MAIN LINE ELECTRIFICATION: CANCELLED
Leaders in the East Midlands have reacted with dismay to the news that the electrification of the Midland Main Line has been cancelled – and have asked for an urgent meeting with Transport Secretary Chris Grayling and the Chair of Midlands Connect Sir John Peace.
The cancellation comes less than two years after the previous Transport Secretary Patrick McLoughlin gave the scheme the final go ahead after it had been first paused then pushed back.
In a statement made on the last day before the Parliamentary recess, Chris Grayling confirmed that whilst the line from London to Kettering would be electrified by 2019, and a section between Clay Cross in Derbyshire and Sheffield will be electrified by 2033 to allow HS2 trains to serve the city – plans to complete electrification through Derby, Leicester and Nottingham have been cancelled.
Instead the Government wants to explore the potential of using ‘bi mode’ rolling stock and ‘alternative technologies’ to achieve benefits similar to high speed electric trains – although it is not clear how these services would be compatible with HS2.
City Mayor Sir Peter Soulsby, Chair of Transport for the East Midlands said: “This is hugely disappointing news for people and businesses across the East Midlands. This was investment that had been promised and re-promised by successive ministers. The cancellation undermines public confidence in the Government’s ability to deliver major transport investment – and I am afraid people will be rightly sceptical about further promises of ‘jam tomorrow’.”
Cllr Jon Collins, Chair of the East Midlands HS2 Strategic Board said: “Electrification of the Midland Main Line through the East Midlands is crucial to our vision for integrating HS2 into the existing rail network – and in particular for securing a connection with the HS2 line to enable direct high speed services between Leicester and Leeds. It is not at all clear that the alternatives to HS2 classic compatible trains can achieve the same level of performance.”
Cllr Kay Cutts MBE, Member of the EMC Executive Board said: “Governments cannot keep chopping and changing like this. We must have consistency and certainty if we are to plan effectively for the future and persuade business to invest in our economies. If new technologies are the answer then we need to know they will work now, and to have some clarity about how and when they can be delivered. I hope this is not another example of the East Midlands being disadvantaged in favour of the south of the country."
East Midlands Councils, Pera Business Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB Tel: 01664 502 620 Twitter: @EMCouncils 121 W: www.emcouncils.gov.uk The MML announcement was made as part of the launch of the Government’s consultation on priorities for the next East Midlands Rail Franchise which will run from August 2019 for up to 10 years.
Cllr Roger Blaney, EMC Lead for the Franchise competition said: “The consultation will help to shape train services across the East Midlands for the next decade. It is bad news on electrification, but it remains very important that councils, businesses and other organizations make well-argued representations on the future pattern of rail services. We will be publishing a draft regional response as soon as possible to highlight some key principles which we hope others can also support and reflect in their own comments.”
End of text.
Notes to Editors East Midlands Councils is the consultative forum for local authorities in the region. It provides support to Councils to improve their services and is a strong voice for the East Midlands. www.emcouncils.gov.uk
East Midlands Councils provides the secretariat for Transport for the East Midlands (TfEM) which brings together lead members for the nine local transport authorities within the East Midlands.
Brief History of Midland Main Line Electrification
Midland Main Line electrification was first proposed in the 1970s but only the southern section from London to Bedford was ever implemented.
Plans to electrify the rest of the line were eventually abandoned by the Government in the 1980s.
There was renewed interest in electrification the early 2000s due to the scale of reductions in running costs, carbon emissions and air pollution that could be achieved – as well as improved train performance.
Network Rail undertook an assessment that suggested that the MML had the best electrification business case of any of the remaining main lines into London, but in 2009 then Transport Secretary Lord Adonis decided to prioritise the Great Western Line (GWL) to Wales and the west-country instead.
Following a vigorous regional campaign, Justine Greening announced in 2012 that MML electrification from Bedford to Sheffield would be completed by 2020.
However in 2015 the project was ‘paused’ by Patrick McLoughlin pending the outcome of the Hendy Review into cost over-runs in a number of other rail enhancements – most notably GWL electrification. The MML project was subsequently re-instated but completion pushed back to 2023.
In July 2017 Chris Grayling decided to cancel the uncommitted elements of the MML electrification scheme, leaving a gap between Kettering and Clay Cross.
East Midlands Councils, Pera Business Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB Tel: 01664 502 620 Twitter: @EMCouncils 122 W: www.emcouncils.gov.uk
Contacts
For further information please contact: Andrew Pritchard, Director of Policy & Infrastructure, East Midlands Councils Tel: 01664 502641 Mob: 07795 060943 E-mail: [email protected]
ENDS.
All news releases from East Midlands Councils are emailed to relevant media organisations throughout the East Midlands and beyond. Please keep us up-to-date with your contact details and inform us of any changes. All news releases can be viewed on our website at http://www.emcouncils.gov.uk/Press-releases
East Midlands Councils, Pera Business Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB Tel: 01664 502 620 Twitter: @EMCouncils 123 W: www.emcouncils.gov.uk Item 6 (c)
28th July 2017
Rt Hon Chris Grayling MP Secretary of State for Transport Great Minster House 33 Horseferry Road London SW1P 4DR
Dear Secretary of State
CANCELLATION OF MIDLAND MAIN LINE ELECTRIFICATION
We are writing to seek an urgent meeting with you to discuss the implications of the decision to cancel the electrification of the Midland Main Line between Corby and Sheffield - known as ’Key Output 2’.
As you will appreciate, proposals to electrify the MML go back decades. Given the scale of continued population and economic growth along the line, it has never been clear to us why rail passengers in the East Midlands should not enjoy the same levels of speed, comfort and reliability as those in Birmingham, Leeds and Manchester. Since 2012, electrification has been promised and re-promised by successive Minsters. The announcement therefore was a significant disappointment to communities and businesses across the East Midlands.
In the Written Statement to Parliament, great emphasis was placed on bi-mode trains delivering the same benefits as electrification and of the potential for new technologies such as hydrogen fuel cells, gas and battery power. These comments raise a number of issues that we would like to discuss in more detail when we meet.
. Aside from the current experiment on local lines in the Lake District, we are not aware of any examples elsewhere in the world were alternative fuels have been used to power inter-city trains (i.e. 125 mph) on a commercial basis. Bi-mode for the East Midlands in 2022 is therefore likely to mean electric and diesel, which means a continuation of diesel traction throughout most of the region – including the AQMAs in Derby, Leicester and Nottingham - for the foreseeable future.
. It is not at all clear that electric/diesel bi-modes can deliver the same level of performance as high speed electric trains or make the most of the line speed improvements now being implemented on the MML. Bi-modes are heavier as they have to carry an additional power unit and fuel, and experience from the Great Western Line suggests they can struggle to deal with gradients and take longer to accelerate/decelerate. There is also no evidence that bi-modes bring the reliability or reduced track/wheel wear and tear that an all-electric fleet can deliver.
. Electrification would appear essential for running HS2 classic compatible services - which is why the Government is committed to electrifying a small part of the Erewash Valley Line and the MML north of Clay Cross by 2033 to allow Sheffield to be served by
East Midlands Councils, Pera Business Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB
T: 01664 502620 E: [email protected] W: www.emcouncils.gov.uk 124
HS2 classic compatible trains. Provision for HS2 classic compatible services serving Leicester is a key part of our vision for HS2 in the East Midlands. It is not at all clear that bi-mode trains could deliver the same level of performance as HS2 classic compatible trains.
. The current 40 year old HSTs will become non-compliant with regulations on disability access and emissions in 2020 - at least 2 years before the new bi-modes are planned to enter service. We are unclear on the proposals of Government for dealing with this 2 year gap.
. The cancellation of electrification will inevitably have an impact on jobs and businesses, particularly in the rail engineering sector - which is heavily represented in the East Midlands. We would like to discuss Government proposals for working with our rail sector to maintain investor confidence and drive innovation.
. The case for electrification remains strong. Electric trains are cheaper to run, quicker, more reliable, quieter and less polluting than the alternatives – which is why HS2 will use electric traction. In addition, it would appear the Government remains committed to the de-carbonisation of the economy and to addressing air quality.
These concerns reflect the position of partners from across the East Midlands and we understand that business leaders from the East Midlands Chamber of Commerce will be writing in similar terms.
We would welcome the opportunity to discuss these issues with you and Sir John Peace in order to understand your plans for the Midland Main Line more fully in the context of the Midlands Engine initiative.
Yours sincerely
Cllr Martin Hill OBE Sir Peter Soulsby Chair of East Midlands Councils Chair of TfEM Leader of Lincolnshire County Council City Mayor of Leicester
Cllr Jon Collins Cllr Kay Cutts MBE Chair of the East Midlands HS2 EMC Executive Board Member Strategic Board Leader of Nottinghamshire County Council Leader of Nottingham City Council
Copied to Sir John Peace, Chair of Midlands Engine and Midlands Connect
East Midlands Councils, Pera Business Park, Nottingham Road, Melton Mowbray, Leicestershire, LE13 0PB
125 T:East 01664 Midlands 502620 Councils E: [email protected], First Floor Office, South AW 01664: www.emcouncils.gov.uk 502 620 E: info@emcouncils .gov.uk W: www.emcouncils.gov.uk
Item 7
Executive Board Meeting
29th September 2017
Asylum and Refugee Resettlement in the East Midlands
Summary
The following report provides information on the progress and implementation of asylum and refugee resettlement programmes in the East Midlands, with specific reference to: . Asylum Dispersal. . Refugee Resettlement . Unaccompanied Asylum Seeking Children. . East Midlands anti-human trafficking partnership.
Recommendation
Members of the Executive Board are invited to:
. Consider potential Local Authority involvement in future contract arrangements including delivery of contracts, inspection or strategic oversight/scrutiny role. . Note progress in respect of the Vulnerable Persons’ and Vulnerable Children’s refugee resettlement programmes. . Note the progress on the detailed costs report and responses received. . Note the developing work of the East Midlands Anti-human trafficking partnership.
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Please note that this report contains confidential information, specifically relating to the numbers of asylum and refugees resettled in the region. Consequently, this report (or information contained with it) is not for public disclosure.
1. Introduction
1.1 EMC has the responsibility for working with Councils in the region and with central Government to understand the impact of migration at a regional/local level, and to develop and manage the implementation of national asylum and resettlement programmes.
1.2 The Board next meets on 28th September 2017 and will discuss progress in relation to unaccompanied asylum seeking children (UASC) particularly progress on the detailed costs report, refugee resettlement and asylum dispersal.
1.3 Members are reminded that the statistics contained in this report (unless specifically stated to the contrary) should be treated as confidential until their public disclosure is confirmed.
1.4 The report demonstrates the progress made across the 3 main Resettlement, Asylum and Support programmes. Across the region there is now a pattern of participation developing which is in line with the Home Office place based approach.
2. Dispersal of Asylum Seekers
2.1 The East Midlands has been an asylum dispersal area since 2001. The Home Office continues to prioritise the need to equitably disperse asylum seekers both nationally and within the East Midlands to relieve pressure on services and housing markets.
2.2 It continues to be the case that the distribution of asylum seekers is uneven across the country and within the East Midlands with areas in the north and midlands accommodating the majority of asylum seekers in urban centres of population.
2.3 Since the last Executive Board there have been no new offers of potential new dispersal areas brought forward within the region. The position remains that unless sufficient numbers of local authorities consent to becoming an asylum dispersal area, the power to impose asylum dispersal on a local authority area could be invoked by the Secretary of State.
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2.4 Asylum seekers are located in 6 dispersal areas across the East Midlands; with approximately 800 in Derby City, 1000 in Leicester City, 950 in Nottingham City 15 in Broxtowe and 55 in Oadby & Wigston. Gedling Borough Council has also agreed to become an asylum dispersal area but no placements have yet taken place. The latest information on the dispersal on asylum seekers supported under Section 95 of the Immigration and Asylum Act 1999 can be found here.
2.5 These figures coupled with reported numbers from the accommodation provider G4S suggest that the normal seasonal summer spike in asylum intake has not happened this year and in fact show a small decrease in numbers across the region.
2.6 The current COMPASS accommodation contract comes to an end in 2019 and the Home Office are consulting with local government, via EMC’s Regional Migration Board, on future asylum dispersal arrangements.
2.7 The Home Office has issued a Prior Information Notice (PIN) on the OJEU site indicating that the Home Office will be approaching the market with a procurement tender in November-December 2017. The PIN can be found here.
2.9 Members of the Executive Board are asked to consider their involvement in future contract arrangements including delivery of contracts, inspection or strategic scrutiny role. Members of the Regional Migration Board continue to be updated on developments and opportunities for regional input.
3. Refugee Resettlement
3.1 In July 2017, the Government announced that the Syrian Vulnerable Persons Resettlement Scheme would be extended to cover persons displaced by the conflict in Syria and will no longer exclusively cover Syrian nationals. The name of the scheme has been amended to reflect this change.
3.2 Since the last Executive Board meeting there have been 38 additional arrivals as part of the Syrian Vulnerable Persons Resettlement Scheme bringing the regional total to 414 refugees. This includes just under 40 arrivals in September 2017.
3.3 Local Authorities that have participated in the resettlement of refugees through the programme are Derbyshire (Chesterfield, Derbyshire Dales, High Peak, South Derbyshire), Leicester City, Leicestershire (Blaby, Charnwood, Melton, Rutland, North West Leicestershire), Nottingham City, Nottinghamshire (Ashfield, Broxtowe, Gedling, Mansfield, Newark and Sherwood, Rushcliffe) and
128 Item 7
Northamptonshire (Northampton). Nationally nearly 8000 refugees have been resettled.
3.4 A schedule of arrivals has been agreed with the Home Office for 2017/18 and the East Midlands is being asked to accept 250 refugees as part of the ongoing commitment to the programme. Currently the region is under-performing against this year’s target and pledges from new and existing areas are being sought. The next charter flight of arrivals is due in November 2017.
3.5 Across the East Midlands, the key challenge to successful implementation of the scheme remains the identification of suitable accommodation. Councils in the East Midlands have continued to support the scheme and additional funding for void costs and adaptations has been welcomed.
3.6 As reported to the June Executive Board a proposal for an adapted property pilot has been sent to the Home Office, Initial feedback on the proposal has been positive and work is continuing to address final questions from the Home office before the pilot can proceed.
3.7 EMC is working with East Midlands Further Education Councils (emfec) on mapping ESOL provision and drawing together best practice to support the roll- out of additional English language training and integration services. The project has not yet delivered its final report and the Regional l Migration Board has been informed of the delay.
3.8 The Home Office are continuing to seek offers of pledges for the Vulnerable Children’s Resettlement Scheme (VCRS). The scheme applies to children and their families outside of Europe in refugee camps in the Middle East and North Africa, with the same funding levels as the current resettlement scheme.
3.9 Of the 3,000 places available it is expected that only a small number of this cohort will be unaccompanied children and these would be dealt with under the National Transfer Scheme. To date, two unaccompanied children and two families have been resettled in the East Midlands as part of this programme.
3.10 Based on a proportion of the population, the number of refugees the East Midlands might be expected to support under the scheme would be just over 200. Two local authorities have indicated willingness to accept VCRS cases going forward.
129 Item 7
4. Unaccompanied Asylum Seeking Children (UASC) and Additional Resettlement Requests
4.1 The UASC National Transfer Scheme (NTS) is based on regions taking a proportion of UASC in relation to their current looked after child population, with no region expected to exceed 0.07% UASC of refugee children as a proportion of the total child population in their area by the end of March 2017.
4.2 While all local authorities in the region continue to be engaged in the ongoing discussions and planning, funding arrangements and local placements/capacity constraints have prevented some local authorities in the region from participating in the scheme itself, specifically: . Derby City has indicated that due to funding and capacity it is not able to participate at this time. . Leicestershire County Council have disengaged from the scheme until such time as the Government meets the full costs of placements and service provision; makes adjustments to the operation of the scheme to make it practical to deliver; or makes participation in the Scheme mandatory. . Lincolnshire County Council’s Executive has agreed to participate in the scheme subject to the participation of all East Midlands authorities. . Nottinghamshire County Council took a decision on 17th July 2017 that its involvement in voluntary transfer schemes, namely the National Transfer Scheme, Regional Transfer Scheme and Dubs Scheme, be suspended in light of the funding shortfall.
a) Numbers of UASC
4.3 To date 57 UASC have been transferred to the region from Kent, in-region from Northamptonshire, or directly from France under the ‘Dubs Amendment’ to Derbyshire County Council, Leicester City Council, Leicestershire County Council, Nottingham City Council, Nottinghamshire County Council and Rutland County Council.
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Numbers of UASC (as of August 2017)
Local Authority Number of Number of UASC 0.07% Number of Children Population UASC to reach 0.07% East Midlands 965,734 306 676 370 Derby City 58,350 5 41 36 Derbyshire 154,022 30 108 78 Leicester City 80,750 25 57 32 Leicestershire 134,800 26 94 68 Lincolnshire 141,379 39 99 60 Northamptonshire 160,692 113(inc 11 missing) 112 -1 Nottingham City 64,978 30 45 15 Nottinghamshire 163,078 36 114 78 Rutland 7,685 2 5 3 Note - Figures provided by EMC based on returns from local authorities
4.4 Similarly to asylum numbers reported above the expected seasonal spike in numbers has yet to materialise in 2017. However 6 local authorities have had spontaneous UASC arrivals in recent weeks which may indicate a delay in arrivals rather than a removal of the peak. Numbers will continue to be monitored by the UASC officer leads and the Regional Migration Board.
b) Funding and Costs
4.5 As reported in June the detailed UASC costs report has been sent to the Home Office, County Councils Network and Local Government Association. EMC’s letter to Immigration and Education Ministers is attached as Appendix 7(a). The Immigration Minister’s reply is attached as Appendix 7(b). The Minister has confirmed he will attend the LGA Asylum and Refugee Task Group on 26th October 2017 and also the LGA Councillor Forum on 19th October 2017. Members of the Executive Board are encouraged to attend the forum.
4.6 The Home Office has also announced a review of UASC funding a letter has been sent to Chief Executives, Directors of Finance and Directors of Children’s Services. Responses are required by 29th September 2017. The letter and supporting terms of reference are attached as Appendix 7(c) and 7(ci). The Home Office has confirmed that the East Midlands costs report will be included as part of the review.
4.7 EMC would encourage all local authorities to respond individually to the review, basing any financial considerations on the regional analysis of UASC costs in order to present a consistent view across the region.
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4.8 EMC will also be submitting a regional response. This will primarily be based on the regional UASC Costs Report which will be submitted in its entirety, along with a summary of the key points highlighting the current funding shortfall to the region of £7.46m per annum, the contribution of ‘legacy’ UASC (arrivals before 1st July 2016) to this figure of £5.65 million, and the projected deficit to the region when UASC numbers reach the 0.07% threshold of £14.7m.
4.9 The Home Office has indicated that they intend to publish the conclusions of their review in January 2018, with implementation in the 2018-19 financial year
c) ‘Dubs and Dublin’ Resettlement
4.10 There have been no arrivals under Section 67 of the Immigration Act (Dubs amendment) this scheme since the last Board meeting. A verbal update will be provided to the Board.
5. Modern Slavery and Human Trafficking
5.1 The East Midlands Anti-Human Trafficking Partnership met on 12th September. Terms of reference and membership have been reviewed and work has commenced on a work programme. An early task is to develop a regional pledge to be launched in tie for Modern Slavery day on 18th October.
6. Recommendations
Members of the Executive Board are invited to:
6.1 Consider potential Local Authority involvement in future contract arrangements including delivery of contracts, inspection or strategic oversight/scrutiny role.
6.2 Note progress in respect of the Vulnerable Persons’ and Vulnerable Children’s refugee resettlement programmes.
6.3 Note the progress on the detailed costs report and responses received.
6.4 Note the developing work of the East Midlands Anti-human trafficking partnership.
Cllr Heather Smith Chair Regional Migration Board
132 Item 7 (a)
19th July 2017
Rt Hon Brandon Lewis MP Robert Goodwill MP Minister of State for Immigration Minister of State for Children and Families Home Office Department for Education 2 Marsham Street House of Commons London London SW1P 4DF SW1A 0AA
Dear Rt Hon Lewis MP and Mr Goodwill MP
Unaccompanied Asylum Seeking Children in the East Midlands An Analysis of Local Authority Costs
We are writing to confirm the actual costs incurred by Local Authorities in the East Midlands in providing care for Unaccompanied Asylum Seeking Children (UASC).
This follows the previous letter from the Chairs of the Regional Migration Board and the Lead Members Group for Children’s Services to your predecessor dated 12th September 2016, highlighting our concerns regarding capacity and associated funding challenges in the region in supporting UASC and participation in the National Transfer Scheme (NTS).
You will be aware that the East Midlands was an early adopter of the National Transfer Scheme (NTS) and the region continues to be a willing participant, subject to on-going individual local authority agreement. To date, 53 unaccompanied asylum seeking children have been transferred via the NTS, principally from Kent and London Boroughs, but also within region from Northamptonshire and via ‘Dubs Amendment’ (section 67 of the Immigration Act 2016) transfers from France. A further five UASC are due to be transferred into the region imminently.
All upper tier local authorities within the East Midlands region have UASC care responsibilities, irrespective of participation in the NTS. Local Authorities and Home Office colleagues are in agreement that it is important to understand the actual cost incurred in looking after UASC and we have therefore undertaken a comprehensive review to provide this information. The results of this analysis are attached to this letter.
133 Item 7 (a)
In summary, the analysis has established the regional average ‘UASC cost’ to local authorities in the East Midlands of £55,194 per annum, against the weighted average Home Office reimbursement of £30,231. The current funding shortfall is therefore £24,963 per UASC per annum, with Home Office funding covering just over half (55%) of the actual costs incurred by local authorities.
We are sure that you understand that this represents a considerable financial burden. Councils are meeting the shortfall (currently £7.46m per annum in the East Midlands, with over half of this shortfall borne by Northamptonshire County Council) from already pressed Children’s Services budgets, and while there has been some bids to the Controlling Migration Fund, this funding will not go anywhere near addressing the deficit in funding.
The Home Office announcement of a review of UASC funding and the opportunity to submit evidence is welcomed and please accept this submission to inform this work.
We should emphasise that the inadequacy of funding, coupled with significant capacity constraints, will inevitably challenge on-going participation in the NTS scheme and so we highlight these matters to you as a matter of urgency.
We hope that the evidence as presented in the attached report will assist you and your officials in making available funding that covers the actual costs of supporting UASC going forward, and we look forward to discussing these matters with you.
Yours sincerely
Cllr Martin Hill OBE Cllr Jon Collins Chairman, East Midlands Councils Vice Chairman, East Midlands Councils Leader, Lincolnshire County Council Leader, Nottingham City Council
Cllr Ranjit Banwait Cllr Barry Lewis Leader, Derby City Council Leader, Derbyshire County Council
134 Item 7 (a)
Sir Peter Soulsby Cllr Nick Rushton Mayor, Leicester City Council Leader, Leicestershire County Council
Cllr Patricia Bradwell, Executive Councillor; Adult Care, Health and Children's Services Lincolnshire County Council Chair, Lead Members Network for Children’s Services (East Midlands)
Cllr Heather Smith Cllr Kay Cutts MBE Chair, Regional Migration Board Leader, Nottinghamshire County Council Leader, Northamptonshire County Council
Cllr Tony Mathias Leader, Rutland County Council
Enc.
135 Item 7 (b)
136 Item 7 (c)
Resettlement, Asylum www.gov.uk/ukvi Support and Integration 6th Floor, Lunar House 40 Wellesley Road Croydon Surrey CR9 2BY
All Upper Tier Local Authority Chief Executives
By email
23 August 2017
Dear Chief Executive,
RE: Unaccompanied Asylum Seeking Children Funding
I am writing to update you on the funding provided to Local Authorities by the Home Office in respect of Unaccompanied Asylum Seeking Children (UASC). The Immigration Minister committed to review the level of UASC funding for the next financial year (18/19) and beyond. I am pleased to tell you that we are now in a position to start the review.
Our aim is to conclude the review and implement any changes at the start of the next financial year (18/19). Our aspirational milestones within this timeframe are outlined below.
September 17 Comprehensive call for evidence September/October 17 Analysis of evidence and initial summary of evidence October/November 17 Consultation and additional evidence gathering November/December 17 Design of new rate January 18 Publication FY18/19 Implementation
I attach the Terms of Reference that sets out in more detail the scope, structure and methodology of the review.
A key evidential dataset that we hold is the Annex A and B returns that Local Authorities submit to us throughout the year as per funding instructions.
I invite you to submit further evidence that you would like to be considered within the review by 29th September 2017. I ask that the evidence is focused around the following questions.
1. What services does this group of children need that is different/additional to the UK looked after children population?
UK Visas and Immigration is an operational command of the Home Office 137 2. Do you share costs across Local Authority boundaries/what costs could be shared?
3. What is working well? Do you have examples of good delivery model options where costs represent good value for money? (For example joint commissioning, in-house v IFAs, semi independent costs etc)
4. What are the cost challenges around the transition points at 17/18/leaving care and how do you meet those?
A forum will be established soon to provide regular opportunities for the review team to engage with your teams and share early ideas/concepts.
Evidence should be submitted to Charmaine Clarke by email [email protected] or at the postal address above.
In the meantime if you have any questions regarding the call for evidence or any other matter relating to the review, please get in touch with Ailish King-Fisher/Joy Johnston king- [email protected] or Charmaine Clarke.
Yours faithfully
Paul Morrison Director Resettlement, Asylum Support and Integration
138 Item 7 (ci)
Review of the National Funding Rates for Unaccompanied Asylum Seeking Children
Terms of Reference August 2017
1. Background
1.1 Historically Unaccompanied Asylum Seeking Children (UASC) were looked after by the local authority in which they first presented, resulting in the majority of UASC being looked after by a small number of ‘Gateway Authorities’. The Home Office set national UASC and Care Leaver grant rates to fund local authorities in looking after UASC and former UASC who became Care Leavers. There were also a number of separate rate arrangements with ‘Gateway Authorities’.
1.2 On 1 July 2016 the Government implemented a National Transfer Scheme (NTS), underpinned by provisions in the Immigration Act 2016; with the aim of establishing a fairer and more equitable distribution of UASC across local authorities in the UK (the provision of the Immigration Act will be extended to Scotland, Wales and Northern Ireland in 2017). An interim protocol sets out how the NTS will operate.
1.3 At the same time as implementing the NTS the Government increased the National Funding Rates for new UASC and Care Leavers, which brought the National Rates into line with the ‘Gateway Authority’ rates. The changes also removed the ‘first 25 rule’ (which had meant that local authorities were not funded for the first 25 Care Leavers they were looking after) so that all relevant Care Leavers receive funding. The funding instructions were further amended to allow local authorities to receive funding where an asylum seeking child who had been looked after by a relative becomes a looked after child as a result of the family relationship breaking down.
1.4 The new funding rates were developed through analysis of returns provided to the Home Office from local authorities setting out the costs they had incurred in looking after UASC over the proceeding year.
The current funding rates are:
Pre July 2016 Post July 2016 Under 16 year olds £95 per day £114 per day 16 and 17 year olds £71 per day £91 per day Care Leavers £150 per week £200 per week
1.5 Despite the significant increases to the funding rates a number of local authorities have suggested that the funding rates are insufficient. The Association of Directors
UK Visas and Immigration is an operational command of the Home Office 139
of Children’s Services (ADCS) published a thematic report in November 2016 that suggested that the funding rates fell significantly short of covering the costs of looking after UASC and Care Leavers.
The Immigration Minister has confirmed to local government that the funding rates would be reviewed, but will not reduce in 2017/18.
2. Review Structure and Approach
2.1 The review will consider -
Scope Under 16 rate 16 and 17 year old rate Leaving Care/Over 18 rate Direct costs – accommodation, social workers, support staff etc Dublin children (allocated to family in the UK) Dublin family breakdown Legacy Gateway costs Devolved administrations costs One off payments (Solihull/Hillingdon/Kent/Croydon, others)
Out of Scope Health and education Refugee Council Children's Panel Age assessment
2.2 The review will seek to answer the following key questions -
What is affordable? Is the rate fitting for accommodation, social work and admin costs? What can be learnt from good practice by some LAs that think the rate is sufficient? Is the current age split of the rate right? Would an exceptional funding pot be a suitable way of managing expensive cases? Does the current funding structure best provide support to individuals who are most vulnerable/is there a better way of doing this? Which of the historical arrangements with Gateway authorities can now fall away? Should the Government provide funding for LAs to undertake Dublin family assessments ahead of transfers on an ongoing basis? If so, how much? Are exceptional funds achieving the objectives they were designed for and is there a better way of achieving them? Are there other funding sources to support this work?
2.3 Timelines
Our aim is to conclude the review and implement any changes at the start of the next financial year. Our aspirational milestones within this timeframe are outlined below.
September 17 Comprehensive call for evidence September/October 17 Analysis of evidence and initial summary of evidence October/November 17 Consultation and additional evidence gathering November/December 17 Design of new rate
140
January 18 Publication FY18/19 Implementation
3. Methodology/Governance
3.1 The review will be led by the Home Office and will be jointly conducted by the Home Office (UKVI, Finance and Immigration and Borders Policy Directorate), Department for Education and Department for Communities and Local Government; the devolved Administrations will be regularly involved. A working group will be established and will meet regularly to share early ideas, concepts and seek a wide range of views/evidence.
3.2 The review will consider evidence and representations put forward by individual local authorities, Strategic Migration Partnerships, and as part of the Controlling Migration Fund bids. There will be a ‘call for evidence’ period to seek information from local government, with a clear structure for feedback. SMPs will be fully involved in the process.
3.3 Regular input will be sought from the Department for Work and Pensions and the Cabinet Office and HM Treasury will be kept updated of progress.
3.4 The review Senior Responsible Officer is Kate Carr, Deputy Director Resettlement Operations. Strategic leads are Ailish King-Fisher/Joy Johnston, Head of Policy and Development and Charmaine Clarke is Project Manager. The Home Office Childrens Board will provide governance and act as a reference group bringing in insight from Local Government Association, ADCS and NGOs. There will be separate discussions with COSLA and WLGA. The Review will report progress to the Board each month and will seek views as required.
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Executive Board Meeting 29th September 2017
Local Government Employment Developments
Summary
This paper updates Members on significant issues relating to local authorities as employers.
Recommendations
Members of the Executive Board are invited to consider and comment on the employment issues identified within the report to inform EMC’s input to future Employers’ meetings at Regional, National and European level.
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1. Introduction
1.1 The Regional Employers’ Board provides political leadership on employment issues and forms the Employer’s side of the Regional Joint Council. East Midlands Councils (EMC) through its role as the region’s Employers Organisation, has the responsibility of supporting employment relations through the operation of the Regional Joint Council.
1.2 This report provides information for members on key current issues for Councils as employers, focusing in particular on EMC’s influencing role on European directives through CEEP, consultation on proposals to charge employers’ organisations for being subject to the Certification Office, and the latest developments in local government pay.
2. Maintaining Influence within the EU in the Context of Brexit
2.1 At the EMC annual general meeting in July 2017, it was agreed that I provide a report to the Executive Board regarding recommendations on EMC’s continued membership in CEEP UK within the context of Brexit.
2.2 EMC’s membership of CEEP UK, in turn, provides membership of CEEP. CEEP is one of the Social Dialogue Partners that negotiates EU Directives. Membership of CEEP therefore provides an opportunity to influence EU Directives. To maximise the region’s influence, I have been President of CEEP UK and Vice- President of CEEP for the last two years.
2.3 Maintaining our influence in the run-up to the UK leaving the EU is important, given that the Parliament is currently debating legislation that will ensure that all European directives will automatically be implemented within UK law at the point of exit of the EU.
2.4 The EU’s current work programme includes a Work-Life Balance Directive, a Refit evaluation of the Written Statement Directive and a Refit evaluation of Directives which give effect to the social partner framework agreements on fixed-term and part-time work, etc. The timescales for completion and implementation of these issues is not yet known, but could be applicable to the UK.
2.5 I have been in discussions with the General Secretary of CEEP to review our membership within this context, to find an appropriate way forward that would enable CEEP UK to continue to represent the interests of local government employers within the social dialogue process. This has included negotiation on a reduced membership fee.
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2.6 Once these discussions have concluded, a report and options will be presented to EMC’s Executive Board before the end of 2017.
3. Consultation on Proposals to Charge a Levy on Employers’ Organisations for the Services of the Certification Officer
3.1 Members will be aware that EMC is the regional employers’ organisation, or association, for local government, which is a role set out in statute. The Certification Officer regulates employers’ associations and trade unions, a role that includes: . Maintaining a list of trade unions and employers’ associations. . Ensuring compliance with statutory requirements for annual returns and enabling public inspection. . Determining complaints concerning trade union elections, some ballots and breaches of trade union rules.
3.2 The Trade Union Act 2016 provides the power to charge a levy on employers’ associations and trade unions to recover the costs of the Certification Officer’s functions. A consultation document has now been launched on the framework on which the levy would operate, which is intended to be equitable, simple, predictable and affordable, and is seeking views on: . What cost components the Certification Officer should use to calculate the contributions to be made by trade unions and employers’ associations. . How much those organisations should pay towards the levy.
3.3 The following have been considered as options for calculating the levy contribution: a) A flat-rate across all organisations (estimated to be £6,854 per year). b) A levy contribution based on size of the organisation’s membership. c) A levy contribution that is adjusted according to the type of organisation (because the Certification Officer provides more services to trade unions than employers’ associations). d) A levy based on a percentage of declared income of the organisation.
3.4 The proposed model is a blends of options (c) and (d) above, with the inclusion of an affordability cap, so that contributions would be: . Based on the type of organisation. . Exempted or subsidised according to the declared income of the organisation. . Subject to an affordability cap based on a percentage of an organisation’s declared annual income (proposed to be set at 2.5%).
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3.5 If the affordability cap is 2.5%, then the model would see the following levy payment for Employers Organisations: . Income less than £140,000 – No payment . Income more than £140,000 and less than £210,000 - £3,493 . Income more than £210,000 – the levy payment would be £5,007
3.6 Clearly this would have a financial impact on EMC and we will be submitting our own response as well as a collective response with our fellow regional employers’ organisations, who are questioning the continued value of maintaining their employers’ association status. The consultation closes on 26th October 2017.
4. Local Government Pay - National Negotiations
4.1 On 19th July 2017 EMC hosting a consultation meeting to inform national pay negotiations, the outcome of which would be effective from April 2018.
4.2 The meeting was well-attended and participants found it useful, as it also enabled a discussion on potential options arising from the joint national working group that has been working on a new national pay spine in order to address National Living Wage projections. To review the pay levels to be compliant with the National Living Wage in the future, the impact on the pay bill could be between 4% and 6% over two years.
4.3 Trade unions have submitted a pay claim for 2018/19 which in summary is for: . One year (2018/19) . A 5% increase on all NJC pay points . The deletion of NJC pay points 6, 7, 8 & 9 (the deletion of these pay points to occur after the 5% increase has been applied to ensure that no NJC pay points fall below the Foundation Living Wage rate of £8.45 per hour)
4.4 The LGA has estimated that meeting the pay claim in full would increase the national pay bill by £559m.
4.5 The Employers’ Side of the Negotiating Committee will be meeting on 18th October to discuss the claim, having received feedback from the regional pay consultation meetings. Reaching an agreement with trade unions for a pay increase of 1% is becoming less likely, with the developments surrounding the lifting of the public sector pay cap for some employees.
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5. Regional Employers Board and Regional Joint Council
5.1 There will be a meeting of the Regional Employers’ Board, followed by the Regional Joint Council on 4th October 2017.
6. Recommendations
Members of the Executive Board are invited to:
6.1 Consider and comment on the employment issues identified within the report to inform EMC’s input to future Employers’ meetings at Regional, National and European level.
Cllr Tom Beattie Chairman Regional Employers’ Board
146 Item 9
Executive Board 29th September 2017
Report of Management Group
Summary
EMC Management group met on 8th September 2017. The following report summarises the main issues considered and agreed by Management group, specifically: a) Budget Monitoring. b) Lead roles and responsibilities.
All papers are available on the EMC website or on request to the Executive Director.
Recommendation
The Executive Board is invited by the Management Group to: . Note the financial position as at 31st August 2017 and the associated forecast outturn to 31st March 2018. . Note lead roles and responsibilities.
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1. Introduction
1.1 This following summary report provides Members of the Executive Board with an update of the key issues considered by Management Group at its meeting on 23rd May 2017.
1.2 All papers are available on request to the Executive Director or on EMC’s website (here).
2. Budget Monitoring 2017-18
2.1 The overall budget for 2017/18 shows a surplus of £27,050. This is the first time where East Midlands Councils has been able to plan for a surplus and follows a period of financial realignment of the organisation.
2.2 The current position remains uncertain in the longer term as much of the grant income is only secured for one year. This has been the position for a number of years but the difference now is that should any grants terminate any liabilities will be minimised.
2.3 Since the budget was set, the time input by EMC staff on the Midlands Connect contract has been reduced, with effect from 1st July 2017, which will result in reduced income of £14,500 during this financial year. Midlands Engine, however, commissioned some short term work which will offset part of this loss. The income from this work was £7,800 and this, together with some other additional income of £1,750, is included in the figures attached to this report. The overall forecast surplus therefore is now reduced from £27,050 to £22,100.
2.4 This report, and appendices, highlights the current financial position for each of the cost centres, together with an end of year forecast. Actuals to the end of August includes only ‘banked’ or ‘committed’ savings and/or additional income invoiced at this time.
a) Financial Report Period Ending 31st August 2017
2.5 The financial statement, attached as Appendices 9(a-f), summarises the financial position for the period to 31st August 2017 in total and for each of the cost centres, and provides a forecast for the outturn to 31st March 2018.
2.6 The staffing budgets are allocated to each cost centre on the basis of estimate of time spent by staff on each activity.
2.7 Corporate staff, those not working on specific grant funded projects, and other corporate costs are allocated on an agreed percentage basis across all
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of the 5 key areas of work. The corporate staff costs have been assimilated into the staffing costs for each cost centre and the other corporate costs (rent, service level agreements, etc.) are shown as overhead costs across all cost centres.
2.8 The budget profile has been updated by a recent review of how staff time is allocated against work areas. This review has resulted in changes to the Staffing Budget allocation for each of the five cost centres. These changes are reflected in appendices 9(a) to 9(f) attached. The overall staffing budget total remains the same as originally agreed.
b) Staffing
2.9 The £654,250 2017/18 staffing budget is an increase from last year’s budget due to the full year effect of staff employed specifically on grant funded schemes operating this year. Included in the budget is the 1% pay award, plus any associated incremental payments, together with a small increase to the employers’ pension contribution.
2.10 Three members of staff are employed on fixed term contracts, which are based on the continuance of specific grants.
2.11 The staffing budget figures for each of the cost centres has changed as a result of the time allocation exercise outlined in paragraph 2.4, above. The overall budget of £654,250 remains the same as originally agreed by Management Group in March 2017.
c) Income
2.12 Income to East Midlands Council is split between: . Membership subscriptions. . Grants, of which there are five specific grants; Migration Enabling Grant, Syrian Refugee Grant, Unaccompanied Asylum Seeking Children’s Grant, Midlands Connect and HS2, all of which are secured through contracts. . Earned Income (which is a mix of consultancy work, services, events and courses provided to member authorities). . Seconded staff to local authorities, of which there is now only one. . Sponsorship, which has hitherto been generated to cover event costs.
2.13 Membership subscription invoices are traditionally issued in May each year. Invoices for 2017/18 have been raised and issued and are therefore accounted for within the total income to date.
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2.14 Grant levels are secured by contracts / agreements and normally any changes in levels of grant are notified / negotiated prior to the financial year in which changes occur. Only one grant, Midlands Connect, has changed for 2017/18 due to a reduction of time required from EMC officers with effect from 1st July 2017, and although the changes were determined before the financial year, it was after the original budget for 2017/18 was agreed by Management Group in early March 2017.
2.15 Earned Income is budgeted at £284,050 which is high given the size of the organisation and achieving this remains challenging. Nevertheless, at this stage the budget profile suggests that the target will be met by the end of the financial year.
d) Costs
2.16 Direct costs include room hire, catering, professional fees, travel & mileage and event costs.
2.17 Corporate costs include premises (rent), computer and office equipment, service level agreements, and wider office administration costs. These costs are apportioned across all cost centres as overhead costs, though the largest proportion is charged to core services.
e) Reserves and Liabilities
2.18 As at the beginning of the financial year 2017/2018, the current level of reserves was estimated to be around £582,000, allocated as indicated below: . £200,000 to an earmarked reserve for staffing liabilities (except pension liabilities). . £60,000 to an earmarked reserve for renewals. . £225,000 to an earmarked reserve for the LCC Pension Sub-fund liability; . £97,000 to an unallocated reserve to manage unforeseen financial events.
3. Management Group Lead Roles and Responsibilities
3.1 Cllrs Neil Clarke and Rob Parker both stood down at the July 2017 AGM from their respective roles as Vice-Chair EMC and Labour Group Leader, replaced by Cllrs Chris Miller and Anne Western.
3.2 To support leadership and accountability, the Management Group agreed to allocate ‘lead member roles’ from within its membership: a) Audit and Financial Control - EMC Principal Vice-Chair (Cllr Jon Collins)
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b) Political Advice and Support - EMC Chair (Cllr Martin Hill) c) Corporate Governance – Conservative Group Leader (Cllr Roger Blaney) d) Performance Management – Labour Group Leader (Cllr Anne Western) e) Conduct and Standards – Independent Group leader (Mayor Kate Allsop)
9. Recommendation
The Executive Board is invited by the Management Group to:
9.1 Note the financial position as at 31st August 2017 and the associated forecast outturn to 31st March 2018.
9.2 Note lead roles and responsibilities.
Cllr Jon Collins Vice Chairman East Midlands Councils
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Item 9, Appendix (a)
Approved Profiled Budget Budget Actual to Forecast to EMC 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £ Income Subscriptions 268,400 268,400 268,400 268,400 0 Grants – Migration 76,450 31,854 0 76,450 0 Grants - Other 240,000 100,000 31,521 225,500 -14,500 Earned Income 284,050 109,966 136,507 293,600 9,550 Secondments 36,300 36,300 36,300 36,300 0 Sponsorship 15,000 6,250 0 15,000 0
Total 920,200 552,771 472,728 915,250 -4,950
Staffing 654,250 272,604 265,935 654,250 0 Members Allowances 23,550 9,813 8.916 23,550 0 Premises 22,000 9,167 9,167 22,000 0 Service Level Agreements 18,500 7,708 7,708 18,500 0 Other Direct Costs 174,850 68,604 64,608 174,850 0
Total 893,150 367,896 356,335 893,150 0
Surplus/-Deficit 27,050 184,875 116,393 22,100 -4,950
Summary Position at end of August 2017:
Surplus forecast of £22,100 at end of March 2018 is £4,950 less than originally estimated. This is due to the Midlands Connect Grant requiring a reduced level of work from July 2017 which means a reduction of income totalling £14,500, however, this is partly offset by Midlands Engine commissioning work to the value of at least £7,800, together with some additional earned income of £1,750.
Actual Grant Income is currently low, but payments for the first quarter in relation to Migration, Syrian Refugees and Unaccompanied Asylum Seeking Children are usually paid by the middle of September each year.
No sponsorship income has been obtained so far this year. This was the same position at this time last year with all the sponsorship income being received during the second half of the financial year.
Other Income targets and areas of expenditure appear to be on course to meet the original budget.
152 Item 9, Appendix (b)
Approved Profiled Corporate and Core Budget Budget Actual to Forecast to Services 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £ Income Subscriptions 268,400 268,400 268,400 268,400 0 Interest 3,000 0 0 3,000 0
Total 271,400 268,400 268,400 271,400 0
Staffing 190,150 77,167 82,302 190,100 0 Members Allowances 23,550 9,813 8,916 23,550 0 Premises 22,000 9,167 9,167 22,000 0 Service Level Agreements 18,500 7,708 7,708 18,500 0 Other Direct Costs 51,800 21,583 21,194 51,800 0 Overhead Costs 38,050 15,854 15,854 38,050 0 Recharged to Cost Centres -80,400 -33,500 -33,500 -80,400
Total 263,650 107,792 111,641 263,600 0
Surplus/-Deficit 7,750 160,608 156,759 7,800 0
Position at end of August 2017:
Subscription income has already met the annual budget. This is because invoicing takes place soon after the start of the financial year and this was the case again this year. Total amount of subscription income is in line with the budget, as would be expected. Bank interest is allocated to EMC at the end of the financial year.
Staffing costs for Core Services appear high at this stage of the year, though staffing costs across all cost centres is less than expected so it may be an allocation issue. Service Level Agreements, Premises costs, Members Allowances and Direct Costs appear to be in line with the budget.
153 Item 9, Appendix (c)
Approved Profiled Budget Budget Actual to Forecast to Contracts & Grants 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £
Income On-going Grant - Migration 76,450 31,855 0 76,450 0 New Grants - Mid Con / HS2} 120,000 50,000 31,521 105,500 -14,500 - Syrian / UASC} 120,000 50,000 0 120,000 0 Sponsorship 2,000 833 0 2,000 0
Total 318,450 132,688 31,521 303,950 -14,500
Expenditure Staffing 252,750 105,313 96,511 252,750 0 Direct costs 37,800 15,750 14,759 37,800 0 Overhead costs 25,900 10,792 10,792 25,900 0
Total 316,450 131,855 122,062 316,450 0
Surplus/-Deficit 2,000 833 -90,541 -12,500 -14,500
Position at end of August 2017:
Midlands Connect grant reduced by £14,500 due to a reduction in the time required of EMC staff from July 2017. This has been partly offset by chargeable work commissioned by Midlands Engine, totalling £7,800, and some other additional income which appears as Earned Income within the Consultancy cost centre.
There has been no income at this stage for any of the other Grants. This is normal as the claim for the first quarter is made during July / August and paid by the middle of September.
Expenditure spend is less than profiled, much of which is staffing. Staffing costs across the whole of EMC are within the budget so this underspend might be a re- allocation issue.
154 Item 9, Appendix (d)
Approved Profiled Member Budget Budget Actual to Forecast to Development 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £ Income Development 28,550 4,758 6,502 28,550 0 Sponsorship 5,000 2,083 0 5,000 0
Total 33,550 6,841 6,502 33,550 0
Expenditure Staffing 38,550 18,125 16,224 38,600 0
Direct costs 17,000 2,833 2,227 17,000 0 Overhead costs 2,850 1,188 1,188 2,850 0
Total 58,400 22,146 19,639 58,450 0
Surplus/-Deficit -24,850 -15,304 -13,137 -24,900 0
Position at end of August 2017:
Income from courses is low against the annual budget but the profile of income is weighted towards the end of the year.
The main programme of councillor development will be starting in September which will include key events promoting infrastructure and growth which are expected to attract sponsorship.
Actual expenditure to date is within the budget expectations with direct costs significantly below profile, though this is to be expected given the timing of events at this stage of the financial year.
155 Item 9, Appendix (e)
Approved Profiled Budget Budget Actual to Forecast to Consultancy 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £ Income Earned Income 130,000 54,167 47,024 139,550 9,550 Secondments 36,300 36,300 36,300 36,300 0 Sponsorship 0 0 0 0
Total 166,300 90,467 83,324 175,850 9,550
Expenditure Staffing 127,650 53,188 52,477 127,650 0 Direct costs 16,500 6,875 6,628 16,500 0 Overhead costs 6,750 2,813 2,813 6,750 0
Total 150,900 62,875 61,918 150,900 0
Surplus/-Deficit 15,400 27,592 21,406 24,950 9,550
Position at end of August 2017:
Secondment invoice for the full year costs was raised in May 2017. Earned Income is less than profiled and will need to be monitored closely during the next few months. The additional income of £9,550, forecast to March 2018 is the work for Midlands Engine and other income used to offset the loss of part of the Midlands Connect Grant.
Expenditure spend is currently in line with budget expectations.
156 Item 9, Appendix (f)
Approved Profiled Fee Paying Budget Budget Actual to Forecast to Events/Services 2017/18 2017/18 Aug 2017 March 2018 Variance £ £ £ £ £
Earned Income 122,500 51,042 82,981 122,500 0 Sponsorship 8,000 3,333 0 8,000 0
Total 130,500 54,375 82,981 130,500 0
Expenditure Staffing 45,150 18,812 18,421 45,150 0 Direct costs 51,750 21,563 19,800 51,750 0 Overhead costs 6,850 2,854 2,854 6,850 0
Total 103,750 43,229 41,075 103,750 0
Surplus/-Deficit 26,750 11,146 41,906 26,750 0
Position at the end of August 2017:
Earned Income is exceeding expectation at this stage of the financial year.
Expenditure is in line with budgetary expectations.
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