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Local Economic Assessment for the Black Country Borough of Sandwell

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Local Economic Assessment for the Black Country Borough of Sandwell LOCAL ECONOMIC ASSESSMENT FOR THE BLACK COUNTRY BOROUGH OF SANDWELL DECEMBER 2010 ii CONTENTS Page SECTION 1: EXECUTIVE SUMMARY – AN ASSESSMENT OF SANDWELL’S ECONOMIC COMPETITIVENESS; ADVANTAGES AND CHALLENGES 1 1.1. About Sandwell’s Local Economic Assessment 1 1.2. What Is Economic Competitiveness? 1 1.3. Why Sandwell’s Economic Competitiveness Matters 2 1.4. The Dimensions of Sandwell’s Competitiveness 2 • Geography 2 • Business Stock 3 • Productivity 3 • Sectoral Focus 4 • Innovation 5 • Application of Technology 5 • Labour Market 5 • Social Aspects of Competitiveness 6 • Infrastructure 7 • Land and Premises 8 • Sustainability and Competitiveness 8 • Economic Resilience 9 1.5. Overall Conclusions on Sandwell’s Economic Competiveness 9 SECTION 2: SANDWELL’S FUNCTIONAL ECONOMIC GEOGRAPHY 11 2.1. Overview 11 2.2. Recognising Sandwell’s Functional Economic Geography (FEG) 11 2.3. Levels of Analysis Influencing Sandwell’s Definition of FEG 12 • Sandwell’s Regional Context 12 2.4. Geographical Location 13 2.5. Sandwell’s Travel To Work Area (TTWA) 14 2.6. Ward Based Commuting Flows 17 2.7. Self Containment 18 2.8. Economies of Agglomeration 19 2.9. Consumer Markets for Goods and Services 20 • Retail 20 • Leisure 22 • Learning 24 • Health 26 • Migration 26 • Media 27 2.10. The FEG for Sandwell’s Businesses 27 2.11. Sandwell’s Administrative Connections 28 SECTION 3: BUSINESS AND ENTERPRISE 29 3.1. Introduction 29 iii iv 3.2. Business Profile 29 • Sandwell’s Business Density 29 • Sandwell’s Businesses by Size 31 • Sandwell’s Enterprise Count by Standard Industrial Classification 33 (SIC) • Business Turnover 35 • Business Profitability 37 3.3. Sandwell’s Business Stock 38 • The Status of Sandwell Businesses 38 • Business Births 39 • Business Survival 41 • Business Growth 41 3.4. Factors Affecting Sandwell’s Output 44 • Productivity 44 • Foreign Investment in Sandwell 47 • Investment in Sandwell Businesses 49 • Enterprise Support 50 • Sandwell Supply Chains 50 • Product and Process Innovation (Application of Technology) 51 • Market Focus of Sandwell Businesses 53 • Raising Productivity in Sandwell through Information 54 Communication Technology • Crime Affecting Sandwell Businesses 55 3.5. The Physical Economy 57 • Economic Benefits of a High Quality Physical Environment 57 • Sandwell’s Employment Land 59 • Sandwell Commercial and Industrial Premises 62 3.6. Demand for Labour 65 • Job Density 65 • The Determinants of Labour Force Structure 66 • Sandwell’s Employment Profile by Sector 74 • Employment Status in Sandwell 78 • Third Sector / Social Enterprise in Sandwell 80 • Preparation for the Future 81 • Sandwell’s Linkages with Partners in Economic Regeneration 84 SECTION 4: PEOPLE AND COMMUNITIES 87 4.1. Socio-Economic History 87 • Economic Background 87 • Social History Overview 88 4.2. Demography 89 • Current Population 89 • Population Growth 90 4.3. Labour Market Supply 91 • Economic Activity 91 v vi • Household Income 92 • Worklessness 93 4.4. Skills and Qualification Profile 99 • Resident Attainment Profile 100 4.5. Factors Affecting Economic and Social Exclusion in Sandwell 105 • Health 105 • Teenage Pregnancy 107 • Child Poverty 108 • The Economic Impact of Debt in Sandwell 111 • Deprivation 112 • Socioeconomic Exclusion 114 • Sandwell’s Ward Based Response to Economic Exclusion and 115 Deprivation SECTION 5: SUSTAINABLE ECONOMIC GROWTH 119 5.1. Introduction 119 5.2. Developing Sandwell’s Low Carbon Economy 119 • Key Sectors for Sandwell’s Low Carbon Economy 119 • Barriers to the Low Carbon Economy in Sandwell 120 5.3. Resource Use and Resource Efficiency 121 5.4. The Economic Contribution of Waste Management In Sandwell 123 • Sandwell’s Waste Improvement Plan 123 • Commercial and Industrial Waste 123 • Opportunities Flowing from the Development of Sandwell’s Waste 124 Sector 5.5. Sandwell’s Transport Connectivity 125 • Location and Connectivity 125 5.6. The Economic Impact of Sandwell’s Housing Provision 129 • Current Housing Stock 129 5.7. The Relationship between Sandwell’s Economy, Natural and 132 Historic Assets • Historic Assets 132 • Natural Assets 132 • Visitor Economy 133 SECTION 6: ECONOMIC RESILIENCE 137 6.1. Sandwell’s Economic Resilience 137 APPENDICES 141 REFERENCES 161 LEA CONSULTEES 167 FURTHER INFORMATION 169 vii viii SECTION 1: EXECUTIVE SUMMARY – AN ASSESSMENT OF SANDWELL’S ECONOMIC COMPETITIVENESS; ADVANTAGES AND CHALLENGES 1.1. ABOUT SANDWELL’S LOCAL ECONOMIC ASSESSMENT Sandwell’s Local Economic Assessment (LEA) fulfils the Council’s statutory duty to have an LEA in place by April 2011. The structure of the document is based on guidelines issued by government (DCLG, 2010a)1. Since the general election in May 2010, the requirement to follow the guidelines has been removed, although the statutory duty to have an LEA remains. The stated purpose of the LEA is to provide the Council and its partners in regeneration with a ‘robust’ analysis of local economic conditions which can in turn be used to inform economic policy and subsequent interventions. The LEA will therefore serve to deliver a common understanding of the economic activities relating to Sandwell and the cumulative effect these may have on sustainable economic growth and employment. The LEA will: • Provide a sound understanding of economic conditions in Sandwell and how these affect the well being of residents and businesses; • Identify the economic linkages between Sandwell and the wider economy; • Examine the comparative strengths and weaknesses of Sandwell’s economy in terms of its competitiveness and the nature of challenges and opportunities it faces; • Identify the constraints to local economic growth, employment and the risks to delivering sustainable growth; • Contribute towards the compilation of a Black Country LEA based on those produced by the Black Country Boroughs; and • Inform the developing Local Enterprise Partnership. The remainder of this section provides an overview of Sandwell’s economic competitiveness. This review has been informed by the assessments that have been undertaken in the other sections. 1.2. WHAT IS ECONOMIC COMPETITIVENESS? Economists continue to debate the definition of economic competitiveness, but the term is generally used to reflect the ability of a nation or local economy 1 to grow successfully in terms of output and employment whilst maintaining its share of trade at regional, national and international levels. Sandwell’s Local Economic Assessment (LEA) brings together the diverse range of factors that affect the Borough’s overall competitive position, and outlines the challenges that these present. 1.3. WHY SANDWELL’S ECONOMIC COMPETITIVENESS MATTERS Essentially, the more goods and services created in Sandwell to sell to consumers locally, nationally and internationally, the more wealth will be created to re-circulate in Sandwell’s local economy. For production to be located in Sandwell, the Borough has to offer advantages over other locations including suitable land, premises and access to markets, an appropriately skilled workforce and support for investors that minimises risk. Without these, the benefits of competitive advantage will be felt elsewhere. 1.4. THE DIMENSIONS OF SANDWELL’S COMPETITIVENESS Assessing the Borough’s overall competitiveness can only be done by basing evaluation of its competitive position on a basket of criteria, e.g. productivity and innovation. Reliance on any one single factor will deliver a realistic overview of Sandwell’s current position. The following section provides an overview of Sandwell’s current competitiveness based on evidence presented throughout the rest of the LEA document. GEOGRAPHY Sandwell is characterised by a high level of interdependence with Black Country partners and Birmingham in terms of its labour market and other activities, and is well placed geographically in terms of competitiveness. Advantages Sandwell’s geographical location at the centre of England and the national motorway network is a major advantage in terms of competitiveness. The Borough is situated at the centre of a large metropolitan market which reduces producer to customer miles and time thereby giving local producer advantage. Challenges • Reverse the trend for residents and business to move towards the surrounding shire counties. • Increase the number of businesses in the borough in order to improve Sandwell’s low level of self containment (the extent to which jobs in the locality are filled by local residents) and provide more opportunities for local people to access employment. 2 • Reduce the tendency of residents to satisfy their needs as customers elsewhere by developing supply in Sandwell. An improved retail and leisure offer in Sandwell to match resources elsewhere will reduce the leakage of consumer expenditure to Birmingham and Dudley. An improved higher education offer located within Sandwell would provide an alternative to studying in Birmingham and beyond. • Ensure a unique retail offer for West Bromwich that adds value to current offerings in neighbouring boroughs and attracts inward consumers. • Improve the attractiveness of Sandwell to inward investors in relation to alternative destinations. BUSINESS STOCK Sandwell is currently disadvantaged in terms of business competitiveness. Advantages The Borough contains a high proportion of SMEs (small to medium enterprise) providing opportunity for growth in terms of output and employment. Many Sandwell companies have the ability to adapt to changing economic circumstances Challenges • Increase the ratio of businesses
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