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
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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
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• 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.
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• 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 to working age population.
• Increase the number of large, strategic companies and inward investors.
• Improve business growth, start up and survival rates, particularly for micro businesses.
PRODUCTIVITY
Sandwell’s competitiveness in terms of productivity and diversity of output puts it at a disadvantage to many other locations. This impacts on the earnings potential of residents and wealth circulating within the local economy.
Advantages
Broadband provision and take up is good in Sandwell.
Transitional sectors through which to grow Sandwell’s output have been identified and are being promoted strategically.
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There is a high potential for maximising agglomeration effects for Sandwell and its Black Country neighbours based around metal manufacturing.
Challenges
• Increase value added output.
• Raise the proportion of local businesses operating within growth sectors.
• Diversify the local economy to reduce vulnerability to changes in the economic cycle.
• Effectively deal with the expected significant impact of government cuts on Sandwell’s dominant business sectors.
• Ensure adequate access to funding for Sandwell’s SME dominated business community.
• Increase the application of output enhancing technology throughout the local economy.
SECTORAL FOCUS
Each of Sandwell’s priority sectors have been evaluated against a number of factors such as potential to provide employment, increase the borough’s productivity and provide some protection against downturn in the economic cycle.
Advantages
Sandwell has developed a clear view of the sectors it seeks to promote in order to grow its future economic growth (diversified manufacturing; business, financial and customer services; green industries).
Challenges
• Deliver the integrated package of support for economic growth outlined within the Sandwell Economic Prospectus (Sandwell MBC, 2010)2 and the Black Country Core Strategy (2010)3.
• Ensure that the skills priorities of neighbouring districts support, rather than contradict or duplicate education and training being provided in Sandwell.
• Diversify the local economy away from its high dependence on manufacturing, wholesale and retail, transport and storage.
4 • Support for supply chain coordination to increase SME access to Tier 1 and 2 businesses.
INNOVATION
There is a need to increase innovation amongst local businesses.
Advantages
Almost half of local businesses surveyed by Sandwell MBC say they belong to a specialist network that helps keep them up to date with emerging technologies or processes.
Challenges
• Find ways to support an increased level of innovation among Sandwell businesses.
APPLICATION OF TECHNOLOGY
A low level of technological investment within local manufacturing and private sector knowledge intensive activities can impact on productivity.
Advantages
Over half of local businesses say they belong to a specialist network that helps them keep in touch with emerging technologies and processes.
Challenges
• Support the increase of knowledge and technological application.
LABOUR MARKET
Sandwell’s competitiveness and output is compromised by a high level of worklessness, poor skill levels of residents and a high propensity to employ residents of other boroughs in higher level occupations, reflected in a low level of self containment.
Advantages
Sandwell has a high participation rate in training and education post 16 with rising attainment levels which continues to close the gap with the rest of the country.
The Borough has a significant, projected increase in the number of higher skilled employment opportunities by 2020.
Sandwell has an above average success rate as a location for apprenticeships.
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Challenges
• Increase job density.
• Put interventions in place to respond to the subdued job growth projected for Sandwell up until 2030 with or without government cuts.
• Put interventions in place to respond to the comparatively high proportion of young people soon to enter the labour market with implications for NEET (not in education, employment and training).
• Increase the level of self employment and part time job opportunities.
• Reduce recruitment risk to employers by providing bespoke, focused, timely and flexible training that meets the needs of specific employers.
• Raise the proportion of residents employed in higher level, knowledge based occupations.
• Ensure that the local labour market can provide the skills to support the growth sectors targeted by Sandwell and its neighbours and the demands of future economic growth.
• Ensure an adequate supply of operative level employment opportunities for residents who will not achieve qualifications.
• Replace skills being lost in the local economy through retirement and recruitment difficulties.
• Promote the emergence of cleaner, more attractive 21st Century type employment opportunities that are likely to appeal to those available for employment.
SOCIAL ASPECTS OF COMPETITIVENESS
Sandwell has poor competitiveness on the social dimension.
Advantages
Sandwell has a significant immigrant population creating potential links with foreign markets.
Sandwell’s population is projected to grow more than the Region but below that of England.
Challenges
6 • Reduce social exclusion based on the low level of employment and economic activity due to high resident incidence of unemployment risk factors such as poor health, qualifications and access.
• Reduce the level of Incapacity Benefit and Job Seekers Allowance claimants.
• Increase resident hourly pay and gross weekly earnings.
• Reduce the significant variations in level of deprivation and worklessness between wards.
• Address the high proportion of unfilled vacancies in Job Centres which suggest a mismatch between job seeker and employer aspirations.
• Retain skilled and educated residents.
INFRASTRUCTURE
An efficient transport network and suitable housing provision are key components for increasing the attractiveness of a place to inward investors and potential residents.
Advantages
The Borough has good connectivity to the national rail and motorway networks
The Borough has generally good public transport links, including the Metro
House prices in the Borough are considerably lower than the national average and more affordable than in neighbouring areas
Challenges
• Reduce congestion
• Use existing transport assets in a smarter way to support business growth
• Promote public transport access to employment locations, particularly outside peak hours (other solutions such as car sharing, work buses, cycling, walking)
• Maximise economic opportunities resulting from the need for carbon zero homes and retrofitting
7 • Substantially improve Sandwell’s ‘housing offer’ to retain and attract higher income households to the borough, as well as providing suitable accommodation for existing residents
LAND AND PREMISES
Sandwell has some competitive advantages in terms of the supply of land and premises.
Advantages
The implementation of the Black Country Core Strategy (2010)4 will give Sandwell the greatest amount of employment land of the four boroughs.
Sandwell’s three employment-led Regeneration Corridors will provide new opportunities for business growth, diversification, new investment and new employment opportunities.
The rateable value of retail premises, offices, industrial space and warehousing for Sandwell is below that of the Region and England.
The rental value of office space and industrial space is cheaper in Sandwell than for Birmingham.
Challenges
• Achieve a balance between sites designated for employment and housing purposes.
• Secure suitable funding for site development.
• Identify suitable sites for Sandwell’s priority sectors.
• Undertake partnership working with developers to minimise risk and optimise site outputs.
SUSTAINABILITY AND COMPETITIVENESS
Sandwell is well placed to take advantage of the opportunities presented by moves to increase efficiency and reduce waste, placing less reliance on finite resources as well as decarbonisation that future economic growth and demand from society depends upon.
Advantages
Eight key sub sectors have been identified for Sandwell which provide low carbon opportunities due to an existing high level of representation within the Borough.
8 Sandwell has a higher proportion of employees in the sectors with potential for sustainable diversification than the other Black Country boroughs or Birmingham.
Challenges
• Full exploitation of opportunities arising from the low carbon economy and potential for fuel efficiency among Sandwell’s existing business community.
• Maximise sustainable diversification opportunities within the transport, communications, manufacture of metals, machinery and electrical equipment and construction sectors.
• Improve access to employment sites and employment opportunities for local people via all modes of transport at all times of day.
• Redeploy those displaced by improved efficiency and productivity.
ECONOMIC RESILIENCE
Sandwell’s overall economic resilience is judged to be poor. This partly derives from the Borough’s low rating in relation to its productivity and poor position in terms of business sector composition and skills base.
Advantages
There is evidence of success in terms of business adaptation to changing economic needs.
Challenges
• Increase qualification levels and economic resilience amongst Sandwell residents.
• Increase the level of economic resilience in relation to cuts in public expenditure.
1.5. OVERALL CONCLUSIONS ON SANDWELL’S ECONOMIC COMPETITIVENESS
Sandwell has competitive advantages on a number of factors such as geographical position and existence of a significant and well established business community. However, against a number of factors the Borough is poorly placed competitively. Notable examples are poor skills base, lack of diversity in terms of output and over reliance on low value adding sectors. External studies have rated the Borough’s economic resilience as low and its overall competitiveness position underpins this.
9 10 SECTION 2: SANDWELL’S FUNCTIONAL ECONOMIC GEOGRAPHY
2.1. OVERVIEW
Strengthening cities roles as centres for business and jobs needs to be based on an understanding of the economic roles of different places” (Centre for Cities, 2010: 16)5. Functional Economic Geography (FEG) is important because people often live in one administrative area, work in a second and may travel to a third to do their weekly shopping or go to the cinema.
Overall, the conclusion is that Sandwell has a strong relationship on a number of measures with its south Black Country neighbour, Dudley and on the eastern side of the Borough, strong linkages with Birmingham. Linkages with the north Black Country boroughs of Walsall and Wolverhampton are weaker, particularly linkages with Wolverhampton.
2.2. RECOGNISING SANDWELL’S FUNCTIONAL ECONOMIC GEOGRAPHY
It is not always clear as to how we decide what and where a district such as Sandwell’s FEG is. As a result, the draft statutory guidance (DCLG, 2009)6 provides an overview of what is needed in terms of analysis of Functional Economic Areas for Regional Strategy and Sandwell’s LEA. The guidance says:
The Government believes that local economic assessments should, as far as possible, match real geographies or functional economic markets (FEMAs). ‘There is not a universal approach to defining functional economic market areas but there is a widely used set of indicators (e.g. labour markets measured by travel to work areas) which should be viewed as a suite from which local authorities can pick a combination which best reflects the key drivers of their local economy. As the boundaries of a functional economic market area will vary depending on the definition, local authorities will need to judge which features of the economy should be considered’ (DCLG, 2009: 20). This requires a strong evidence base and the local economic assessment can contribute to this. After choosing a set of appropriate indicators, these can be mapped to identify the best fit in terms of functional economic market areas.
Further guidance (DCLG, 2010b)7 reflects the widely held view that FEMAs are the most sensible geographical unit at which to develop economic policy. There are many factors which can be taken into account including identifying:
• The geography of labour markets; • Housing market areas; • The geography of trade between businesses – that is supply chain and markets;
11 • Consumers’ patterns of travel to receive a variety of services; and • Transport networks.
Although some LEAs will identify a single urban centre, Sandwell’s FEMA is polycentric, both at a local district level and as part of the polycentric sub regions of the Black Country and the Birmingham and the Black Country City Region.
2.3. LEVELS OF ANALYSIS INFLUENCING SANDWELL’S DEFINITION OF FEG
Functional Economic Areas can be aggregated at the following spatial levels:
• Super Output Area Level; • Ward Level; • Sub regional Level • City Region Level; • UK Level; and • Global.
However, analysis at different levels can each give a differing view of Sandwell’s FEG. For example, analysis at sub regional level can show the four Black Country boroughs collectively to have a high level of self containment. However, analysis at borough level shows Sandwell to have a low level of self containment. This issue becomes critical when developing remedial interventions.
SANDWELL’S REGIONAL CONTEXT
A useful starting point is the West Midland Region’s FEG, its polycentric economy and Sandwell’s role within it. A key study (Bryson, 2006)8 provides some important observations relating to this. ‘The West Midlands is a complex economic region which is far wider than the Birmingham economy. It is readily apparent that the spatial patterning of economic activity in the West Midlands region is shifting away or expanding from Birmingham and the Black Country to a belt that encircles the conurbation.
Bryson calls the belt E3I which,’ combines economic, entrepreneurial, environmental and innovation factors’ (see figure 2.1). The belt lies between 20km and 40km from the conurbation and includes Stratford upon Avon, Warwick, Lichfield, Cannock, Bridgnorth and Bromsgrove. Within the belt there is important differentiation of activities. The study refers to the belt as the E3I belt and suggests that the emergence of the belt reflects a combination of factors including lifestyle, accessibility, quality of environment, as well as the existence and development of a range of innovative manufacturing and business and professional service activities’.
12 Figure 2.1: The E³I Belt
Source: Centre for Local Economic Studies CLES (2009)
The Centre for Local Economic Studies report (2009)9 suggests that ‘ the developing economic geography of the West Midlands has been facilitated by the existence of a good strategic transport network, based upon motorways and suggests that the motorway network which coincides with a poor local transport network is central to understanding the functioning geography’ of Sandwell and its regional neighbours.
2.4. GEOGRAPHICAL LOCATION
Economic Context
The power of location as a determinant of Functional Economic Geography is based on the proposition that administrative boundaries are often economically meaningless. Better decisions relating to increasing economic growth and competitiveness should therefore be based on a geographical area defined by labour, housing and other markets such as retail, plus the pattern of business engagement.
Sandwell has a population of 289,100 and is situated near the centre of England, within the West Midland conurbation to the west of Birmingham, with Dudley situated to the west, Wolverhampton to the north and Walsall to the north east.
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The importance of economic centres is dependant on their size and location, which act as an attraction to potential investors. Centre for Cities (2010: 18)10 argue that Sandwell derives economic benefit from its close proximity with Britain’s second largest city, Birmingham, as well as the markets provided by neighbouring boroughs. A total of 91.6% (Sandwell MBC, 2010)11 of the population of England and Wales live within 150 miles of Sandwell, offering the Borough major advantages in terms of markets for goods and services.
The Sandwell Business Survey1 (Sandwell MBC, 2010g)12 has found good transport links as the highest ranking positive aspect of being located in Sandwell. When asked about the importance of being located next to Birmingham however, only 13% gave this as a positive aspect.
Rice and Venables (2004)13 have suggested that a key influence impacting on productivity, when analysed by NUTS32 sub regions (Dudley and Sandwell), is how close they are to economic mass. They define this as the size of the population of working age within driving time of 80 minutes or shorter. The study concludes that doubling the economic mass to which an area has access, e.g. by reducing journey time to the nearest big city can raise productivity by 3.5%.
2.5. SANDWELL’S TRAVEL TO WORK AREA (TTWA)
Economic Context
Sandwell lies at the geographical heart of the West Midland Metropolitan area, described by Centre for the Cities (2006: 6)14 as polycentric with a number of different employment and retail centres. Specifically the ‘city region’ is described as ‘including four travel to work areas (TTWAs), including two focused on the Black Country to the west’. These are Sandwell / Dudley and Walsall / Wolverhampton.
An analysis of TTWAs has been undertaken by the Office for National Statistics(ONS) using census data for commuting between wards, based on the different levels of individual’s home and work. These are based on wards with an economically active population of at least 75% actually working in the area. According to this measure there were 243 TTWAs within the UK in 2007 (ONS, 2007)15. Dudley and Sandwell together fulfil the criteria for a single TTWA. However, it should be noted, this area is not co-terminus with the Dudley and Sandwell borough boundaries. As a rule of thumb, Sandwell’s wards to the east of the M5 motorway are included within the Birmingham TTWA.
1 A copy of the Sandwell Business Survey tool (2010g) can be found in Appendix Seven. 2 Nomenclature of Units for Territorial Statistics (NUTS) 3 comprise of counties and groups of unitary authorities.
14 Access to employment opportunities can be a problem for many Sandwell residents. The 2001 Census showed that 37.5% of households within Sandwell did not have access to a car or van. In terms of car use by residents in Sandwell, results from the 2001 Census showed that 62.4% of those aged 16-74 in employment travelled to work by car/van (either driving or as a passenger), slightly below the regional average of 67.2%. The proportion of residents travelling to work by bicycle or on foot was similar to the regional average at 12%. The proportion of residents using public transport to get to work was 17.2%, significantly higher than the regional figure of 10.5%, though lower than Birmingham. While the number of people travelling less than 2km to work was only marginally higher than the regional average (20.8% against 20.1%), the proportion travelling between 2km and 5km to work was significantly higher than for the Region or surrounding authorities, at 31.1% against 22.5% for the Region16.
Birmingham is the biggest external employment location for Sandwell residents by a considerable margin, see figure 2.2, with the trend for cross border flow increasing between 2001 and 2008, see table 2.1. In contrast, commuter flows between Sandwell and the three Black Country boroughs have reduced over time (ONS 2010)17:
Figure 2.2: Working Destination of Sandwell Resident 2008
Source ONS 2010, Commute Annual Population Survey 2008
15 Table 2.1: Change in Working Destination Flow of Sandwell Residents 2001/08 2001 Flow 2008 Flow 1 Sandwell 48.5% 45.5% 2 Birmingham 26.5 28.5 3 Dudley 10.2 9.1 4 Walsall 6.5 4.4 5 Wolverhampton 3.4 3.1 6 Coventry … 1.3 7 Solihull 1.2 0.8 8 Stratford-upon-Avon … 0.6 9 Wychavon … 0.6 Source: ONS 2010 Commute Annual Population Survey 2001 & 2008
Sandwell’s Black Country neighbours have also seen an increase in the importance of Birmingham as a place of work for their residents, with the exception of Walsall which experienced a fall (ONS, 2010)18. This may reflect an increasing tendency for workers displaced by reductions in manufacturing employment to seek other, more diverse opportunities elsewhere within easy travelling distance. However, Howarth (2010)19 suggests that data shows that qualifications and professional status have a high level of influence on the propensity to do this.
Approximately half of Sandwell’s employees live within the Borough (see figure 2.3 and table 2.2 below). Although a declining trend between 2001 and 2008, other local authority areas are home to a significant proportion of Sandwell employees. Notably, Dudley is shown to be the largest residency location of Sandwell employees outside the Borough. Notably locations outside the conurbation appear in the table suggesting that less urbanised areas such as South Staffordshire have become increasingly attractive to Sandwell workers over time.
16 Figure 2.3: Residential Origins of Sandwell Workers 2008
Source: ONS 2010, Commute Annual Population Survey 2008
Table 2.2: Change in Residential Origins of Sandwell Workers 2001/08 2001 Flow 2008 Flow 1 Sandwell 50.5% 51.1% 2 Dudley 17.7 15.1 3 Birmingham 9.8 9.1 4 Walsall 7.7 7.5 5 Wolverhampton 6.0 5.1 6 Bromsgrove 1.0 2.4 7 Lichfield 0.9 1.5 8 South Staffs 1.4 1.5 9 Solihull 0.4 1.0 10 Telford and Wrekin … 0.8 Source: ONS (2010) Commute Annual Population Survey 2001 & 2008
2.6. WARD BASED COMMUTING FLOWS
Sandwell’s inward commuting flow data shows significant differences between Sandwell wards in the location from which non residents working in those wards originate (WMRO, 2010)20. The following observations can be made relating to inward-commuting patterns:
Cradley Heath and Old Hill show a strong orientation towards Dudley, Wyre Forest and Worcestershire for both primary and secondary in-commuting. The limited in-commuting from within Sandwell borough originates from Rowley Regis and Blackheath but little from beyond. The rest of Sandwell,
17 Birmingham, Walsall and Wolverhampton do not feature in the Old Hill / Cradley Heath in – commute.
Oldbury’s primary in –commute area is within Sandwell borough. The secondary inward commute area extends to a significant part of north Worcestershire, most of Dudley and beyond into Wyre Forest. There is little in-commuting from Birmingham, Walsall or Wolverhampton.
Rowley data is characterised by in-commuting from primary and secondary areas in Dudley, Blackheath and Oldbury but drawing from significant secondary locations in rural locations to the West such as Wyre Forest and North Worcestershire.
Smethwick/ Soho and Victoria / St Pauls – In-commuting is primarily from within Sandwell but with significant secondary in-commuting from Birmingham, the Dudley wards straddling the Birmingham border and north Worcestershire. Specifically, Soho and Victoria has a greater in-flow from Dudley, whilst St Pauls differs in drawing from a wider area of Walsall. There are only minor pockets of Wolverhampton within the secondary in-commute area.
Tipton Green draws primarily from Sandwell and a large area of Dudley and the rural districts to the west of Dudley. Tipton also draws from a number of secondary locations in Wolverhampton, and to a lesser extent the Walsall wards bordering Sandwell and Wolverhampton.
Wednesbury South draws primarily from the northern half of Sandwell and wards adjoining Sandwell within Dudley, Wolverhampton, a large part of Walsall and locations within South Staffordshire. There is however little in- commuting from Birmingham
West Bromwich Central draws primarily from the wider borough but also significantly from Dudley, Walsall and wards adjoining Sandwell within Wolverhampton and Walsall. There is also a secondary commuting area within South Shropshire.
2.7. SELF CONTAINMENT
Self containment manifests itself in two dimensions; first, demand side self containment describes the extent to which jobs in the locality are filled by local residents; and secondly, supply side self containment describes the extent to which employed residents of the area fill local jobs. Low residence self containment in local authority areas means that a comparatively low proportion of residents work in the area.
Table 2.3 shows that the Black Country as a sub region has a high level of self containment.
18 Table 2.3: Black Country Travel To Work Areas (TTWAs) Key Data 2007 Number of people in Supply side Demand employment Number of Self side Self- Surface resident in the Jobs in the Containment containment area (sq TTWA name TTWA TTWA % % km) Dudley & Sandwell 204,653 213,435 71.4 68.4 232 Walsall & Cannock 158,499 147,490 66.7 71.7 386 Wolverhampton 163,378 157,648 68.2 70.6 405 Total in Black Country Area 526,530 518,573 69.0 70.2 Source: Black Country Consortium (2010)21
A study of community patterns in Great Britain based on Annual Population Survey (APS) data for 2008, shows however that Sandwell when assessed on its own has a low residence self containment ratio compared to its neighbours. At 45.5%, this compares with Dudley (57%), Walsall (55%), Wolverhampton (65%) and Birmingham (81%). The Birmingham and Wolverhampton estimates would be expected as both have city status and ( in Birmingham’s case ) is the largest single local authority district in Europe, and therefore more likely to provide a workplace destination for residents. Regionally, Sandwell’s position compares to Bromsgrove in Worcestershire (44%) and Solihull (47%) where a similarly high proportion of residents work elsewhere.
Sandwell’s position on self containment is typical of a borough located near an ‘employment hub’22; in this case Birmingham. Consequently, Birmingham is the predominant destination for Sandwell residents, accounting for 28.5%.
2.8. ECONOMIES OF AGGLOMERATION
Economic Context
Economies of agglomeration are achieved when firms locate or ‘cluster’ near each other. As companies cluster together, the effects of scale and network can result in a decline in costs. This is primarily due to firms having multiple suppliers, common supply chains, greater specialisation and access to appropriately skilled labour.
Agglomeration effects can further improve competitiveness when multiple firms in the same sector compete with each other as the location becomes well known as a centre of excellence for that particular product, whilst attracting more businesses with connections to the sector into the area.
As the figure 2.4 shows, Sandwell and the other Black Country boroughs have a high concentration of residents working in areas with a high level of manufacturing. This agglomeration effect is of significantly higher intensity in manufacturing than that for nearby Birmingham.
19 Figure 2.4: Percentage of Residents Working in Areas with High Manufacturing Employment
Source: WMRO (2010)23
However, it should be noted that agglomeration can produce negative effects such as overcrowding and congestion. It is when advantages are outweighed by disadvantages over time that cities stop growing. Sandwell and the Black Country suffer particularly from congestion and poor access to employment sites.
2.9. CONSUMER MARKETS FOR GOODS AND SERVICES
RETAIL
Advantage West Midlands (AWM) and West Midland Regional Observatory (WMRO) commissioned Experian (2009) to identify the functional sub regions in the West Midlands24. This work serves to contribute towards our understanding of the role of different places, in particular those which drive the performance of the regional economy.
A noticeable feature of the study is that the defined sub regions for both retail and leisure within the Region do not include one that is specific to Sandwell. This is probably due to the perception that no centre within the borough is distinctive enough in terms of its offer. This contrasts with the other Black Country locations of Walsall, Wolverhampton and Merry Hill which all achieve sub regional status of their own. In terms of retail sub regions, Sandwell falls mainly within the Merry Hill area, but within the Birmingham sub region in the wards along the Birmingham boundary.
20 The Study (Experian, 2009)25 uses a ‘gravity model’ to identify catchment areas in which 75% of total spend is contained, and is then calibrated using the Where Britain Shops survey and against travel to work areas. The retail destination that Sandwell residents are most likely to travel to is shown in figure 2.5.
Figure 2.5: Retail Destinations (Sub-regional) for Sandwell
Source: Experian (2009)
21
Clearly, Sandwell falls within range of Birmingham and Merry Hill for the three top ranking centre types (Experian, 2009: 4). The study identifies areas warranting sub regional status of their own, but also identifies natural groupings of sub regions (Experian, 2009: 10). Although not specifically mentioned, Sandwell would fall within a group of retail sub regions including Birmingham, Lichfield, Merry Hill, Solihull, Walsall and Wolverhampton.
It can also be concluded that Sandwell residents rarely leave the West Midlands Region to shop (Experian, 2009: 9).
LEISURE
Experian (2009) have identified 44 leisure sub regions within the West Midland Region. As with retail, Sandwell does not achieve status as a centre in its own right. Again, this situation contrasts with that of Merry Hill, Wolverhampton and Walsall.
The Study (Experian, 2009:13) uses a gravity model, similar to that used for retail which looks at the distance people are prepared to travel for leisure and the attractiveness of the leisure offer. The latter takes a holistic view of quality and variety of leisure facilities including restaurants, cinemas, pubs, bars and events venues. The leisure destination that Sandwell residents are most likely to travel to is shown in figure 2.6.
22 Figure 2.6: Leisure Destinations (Sub-regional) for Sandwell
Source: Experian (2009)
Further analysis clearly demonstrates that for most leisure activities people are likely to stay within their local area (Experian, 2009.). Sandwell’s pubs and restaurants gain from this, but visits to cinemas, theatres, bowling alleys and events fall easily within the pull of Birmingham and Merry Hill.
23 Sporting participation in Sandwell, the Black Country and Birmingham is comparatively low. Experian (2009: 19) concludes that sport participation varies considerably across the West Midlands and that the highest participation rates tend to be in wealthier, more rural local authorities. The Report suggests that, ‘in terms of groupings, it would be sensible to separate out each of the levels of participation in particular, focusing upon Birmingham and the Black Country as hotspots for limited sports participation’.
LEARNING
Historic travel to learn patterns show significant post-16 movement out of Sandwell, mainly to Further Education (FE) colleges, making Sandwell a net exporter of post-16 learners. Of the c9,800 Sandwell residents aged 16 to 18 engaged in education or training in 2009/10, 37% did so at providers (FE Colleges, School / Academy Sixth forms, Independent training providers) based in Sandwell; 39% at providers based in other Black Country local authority areas, mainly Dudley; and 19% at providers outside the Black Country, mainly Birmingham. The balance of 5% were learners registered at Apprenticeship providers whose central base is outside the West Midlands; however, most of these providers have training centres within or near to the Black Country, so this provision can also be counted as local.
Whilst just over 6,000 learners left the Borough, it should also be noted that nearly 800 post-16 learners came into Sandwell from other areas in 2009/10, 52% to Sandwell College and 48% to school sixth forms (SSFs) and Academies.
The total number of young people attending higher education (HE) increased from 1,000 in 2006/7 to 1,070 in 2007/8. More Sandwell learners attend HE institutions in Birmingham than elsewhere. Table 2.4 shows the destinations of Sandwell residents aged 18 and 19 attending higher education in 2006/7.
24 Table 2.4: Sandwell Residents aged 18 & 19 - Higher Education Starts 2006-07 % in Institution 18 19 Total % 05-06 The University of Wolverhampton 164 102 266 26.6 27.4 Birmingham City University 82 34 116 11.6 11.8 The University of Birmingham 73 10 83 8.3 7.8 Aston University 41 16 57 5.7 6.5 Coventry University 38 17 55 5.5 5.9 Newman College of Higher Education 33 8 41 4.1 2.8 Birmingham College of Food, Tourism 19 12 31 3.1 2.4 and Creative Studies Staffordshire University 18 12 30 3.0 2.0 De Montfort University 12 14 26 2.6 3.2 The University of Worcester 18 7 25 2.5 1.2 The Nottingham Trent University 17 5 22 2.2 2.6 The University of Keele 14 5 19 1.9 1.4 Aberystwyth University 14 2 16 1.6 1.4 The Manchester Metropolitan University 10 4 14 1.4 1.2 The Open University 3 8 11 1.1 0.6 The University of Nottingham 8 2 10 1.0 0.9 The University of Leeds 8 1 9 0.9 - The University of Leicester 6 2 8 0.8 - Bangor University 5 1 6 0.6 - University of Chester 6 0 6 0.6 - Leeds Metropolitan University 3 3 6 0.6 - The University of Manchester 5 1 6 0.6 - The University of Sheffield 6 0 6 0.6 - The University of Northampton 1 4 5 0.5 - Total 681 319 1,000 Source: Higher Education Statistics Agency (HESA)
Table 2.5, showing the destinations of Sandwell learners of all ages, identifies that approximately one quarter of Sandwell students study at the University of Wolverhampton.
Table 2.5: Learning Destinations of Sandwell Learners of all Ages Undertaking HE Qualifications in 2007/8 Institution Student Numbers % of all Students University of Wolverhampton 1,760 25.6% Birmingham City University 1,155 17.2% Birmingham University 568 8.5% Open University 500 7.5% Coventry University 328 4.9% Aston University 279 4.2% Newman College of HE 191 2.8% Birmingham College of Food 171 2.5% University Worcester 138 2.1% Source: SMBC (2008)26
25 HEALTH
‘Sandwell Primary Care Trust is at the heart of the local National Health Service (NHS) in Sandwell. It serves a local registered population of approximately 320,000. The biggest providers of hospital services to the Trust are Sandwell and West Birmingham Hospital Trust and Dudley Group of Hospitals Foundation Trust’ (Sandwell Primary Care Trust, 2010)27.
Sandwell is the only Black Country borough to have a cross border NHS Trust; the Sandwell and West Birmingham Hospitals NHS Trust. The other Black Country boroughs are covered by their own NHS Trust.
The Trust admits 117,000 patients a year for treatment and provides services to between 500,000 and 600,000 people in Sandwell, Western and Central Birmingham and its surrounding areas.
“Sandwell’s main health market is shared with Birmingham due to the coverage of the NHS Trust with its two existing hospitals and the new plans for Smethwick. Birmingham also supplies a wide range of specialist services such as those provided by the Children’s, Women’s and Orthopaedic hospitals. In the north of the Borough, residents are more likely to choose Dudley hospitals. However, links with Wolverhampton hospitals tend to be weak, probably due to distance and being used mainly for specialist treatment” (Sandwell PCT)28.
MIGRATION
Data from the 2001 census provides the latest detail as to migration patterns at district and ward level. At the time of the Census, data shows Sandwell and its Black Country neighbours to have suffered from substantial outward migration, while Telford and Wrekin, along with South Staffordshire gained population through inward migration. Both Sandwell and Walsall show a strong relationship with Birmingham. Those entering Sandwell are most commonly from Birmingham and those leaving Sandwell are most often going to Dudley. Sandwell is both the most common origin and destination of migrants in and out of Dudley.
Of the districts shown in table 2.6, two-thirds of people moved within their own district and one third moved across local authority boundaries. The Report (ECOTEC, 2008)29 suggests that the Black Country is characterised by a number of largely self contained local markets. Developers are quoted in the report as saying that the catchment areas for new build projects in the Black Country tend to be quite small. They also suggest that the C3 area which includes Sandwell (and the Black Country boroughs plus Cannock Chase and South Staffordshire and Telford and Wrekin) is generally ‘not very attractive for higher income households moving into the West Midlands from elsewhere’, with places like Solihull and Lichfield claiming the lions share of this market. A more detailed analysis of Sandwell’s housing market can be found in Section 5.
26 Table 2.6: Headline Migration Figures 2001 for the C3 Area of the West Midlands District % self Net Most common Most common containment migration origin of those destination of entering those leaving Cannock Chase 63% -20 Lichfield Lichfield Dudley 68% -1,587 Sandwell Sandwell Sandwell 65% -952 Birmingham Dudley South Staffs 43% 161 Wolverhampton Wolverhampton Telford & Wrekin 69% 987 Shrewsbury & Shrewsbury & Atcham Atcham Walsall 68% -1,493 Birmingham Birmingham Wolverhampton 67% -1,358 Walsall South Staffs NB: Census 2001; % of self containment = internal migrants / (emigrants + immigrants) /2) + internal migrants. Source: ECOTEC (2008)
MEDIA
The most commonly read newspaper in Sandwell is the Express and Star, with a fairly sharp cut off point at the Birmingham boundary where the Birmingham Mail predominates. It is worth noting that the Express and Star readership area is large and extends as far north as Stafford (WMRO, 2010: 11)30. Sandwell and the other districts within the Express and Star sales area each have their own community based edition. This contrasts with free newspapers, which tend to reflect and target markets for goods and services.
Table 2.7 shows that Sandwell lies within the listenership Total Service Area for a number of local and regional radio stations. Locally available stations include:
Table 2.7: Total Service Area of Local and Regional Radio Stations BRMB Birmingham Beacon Wolverhampton The Wolf Wolverhampton Galaxy Birmingham BBC WM Birmingham and the Black Country Heart West Midlands Region Smooth West Midlands Region Kerrang West Midlands Region XL Asian programming Birmingham RAJ Asian programming Sandwell Source: Sandwell MBC (2010) Policy and Strategy Unit
Commercial broadcasting to Sandwell is dominated by programmes targeted at Birmingham and the wider region.
2.10. THE FEG FOR SANDWELL’S BUSINESSES
The Borough has a vibrant local economy with around 9,000 businesses and a workforce of 127,000 (Sandwell MBC, 2010: 4)31.
27
For businesses, FEGs can be genuinely global – flows of knowledge and capital typically paying scant regard to international boundaries, let alone those associated with local authority boundaries. Local supply chains may be particularly important to Sandwell. Broad distinctions should be made between firms that are primarily serving local customers and those serving international markets. However, many Sandwell businesses are located below the first tier within the supply chain which means they do not supply the end user directly.
Data provided by one of Sandwell’s major logistics companies serves to give an insight as to where local businesses export their products between 2009/10. According to the data, of the 249 countries in the world, Sandwell companies export to 121 of them, almost half of the total.
2.11. SANDWELL’S ADMINISTRATIVE CONNECTIONS
The leaders of the Black Country business community and four local authorities are working together to drive economic growth through a proposal to establish a Black Country Local Enterprise Partnership (LEP). The work is based on a shared Black Country 30 Year Vision based on a Black Country [economic] Study. This has provided the evidence base, vision and strategic direction for the Black Country Core Strategy which has been prepared jointly by the four local authorities.
The role of the LEP will be to set strategic direction and priorities for the use of funding and enabling delivery through a commissioning/joint commissioning role based on principles of subsidiarity and local accountability (Black Country Consortium, 2010)32.
28 SECTION 3: BUSINESS AND ENTERPRISE
3.1. INTRODUCTION
‘Thriving businesses are vital to the UK’s economic recovery. Business people, investors and policymakers all agree that they create jobs, wealth and wider prosperity’ (NESTA, 2009)33.
If Sandwell is to deliver its priority of educated and skilled people in employment, the Borough has to deliver a fit for purpose location which maximises the potential to enable this to happen. Only by ensuring that suitable sites and premises are available, linked to bespoke training and support for enterprise will Sandwell be able to compete for the business investment it needs.
To examine the dimensions of Sandwell’s business and enterprise profile Section Two is divided up into six parts:
Part One – Business Profile Part Two – Business Stock Part Three – Factors Affecting Output Part Four – The Physical Economy Part Five – Demand for Labour Part Six – Preparation for the Future
3.2. BUSINESS PROFILE
SANDWELL’S BUSINESS DENSITY
Economic Context
The higher the number of businesses per worker, the greater the size of the business centre and the opportunities open to local people for employment.
A high count is more likely to deliver greater choice of opportunity in terms of employment and greater diversity in terms of output and innovation. It can also present a greater diversity of investment opportunities for businesses and individuals.
Data shown in table 3.1 regarding active businesses in Sandwell, the Black Country and the West Midlands Region and England shows an overall, upward trajectory in terms of numbers between 2004 and 2008. However, Sandwell’s increase is proportionately lower than England and the West Midland region, but higher than its Black Country neighbours, particularly Wolverhampton, which has seen a decline.
29 Table 3.1: Active Businesses 2004/08 2004 2005 2006 2007 2008 England 1,885,265 1,904,490 1,924,485 1,987,590 2,024,990 West Midlands 180,380 182,995 184,580 190,160 191,490 Black Country 32,010 31,925 31,865 32,590 32,290 Dudley 9,700 9700 9,820 10,150 10,120 Sandwell 7,425 7,500 7,640 7,845 7,775 Walsall 7,470 7,500 7,465 7,605 7,485 Wolverhampton 7,415 7,225 6,940 6,990 6,910 Source: Black Country Consortium (2010)34.
Comparisons of measures used for analysis of local economies can sometimes be a problem given the differences in economic structure, the number of companies and people in the locality. To overcome this, data can be weighted by calculating the number of businesses as a proportion of people in the area. A commonly used measure of this is business density. This is the number of businesses in Sandwell as a proportion of residents of employment age.
The Experian Resilience Index (2010a)35 ranks Sandwell in the lower quartile (score 296) out of 324 nationally in terms of business density (Appendix One). Further analysis, as shown in table 3.2, suggests that Sandwell has a high ratio of working age residents to businesses. This implies that a policy focus on business growth job creation should be a priority for Sandwell in order to bring the ratio down.
Table 3.2: Working Age Resident Population – Business Population Ratio 2008 Location Working Age Business Ratio of Workers Resident Population Population to Businesses (2008) Sandwell 175,200 8,875 19.7 Walsall 150,100 7,910 18.9 Wolverhampton 145,300 8,180 17.7 Dudley 183,500 10,875 16.8 Birmingham 638,200 33,745 18.9 Source: ONS - NOMIS
Current government policy emphasises the need for the private sector to provide the employment opportunities of the future. Data for Sandwell and its neighbours (see table 3.3) show the Borough to have the highest ratio of 0–15 year olds who will enter the labour force within the next few years. This suggests that out of the Black Country boroughs and Birmingham, Sandwell has the greatest need to focus policy on the creation of employment opportunities for young people. This will need to be coupled with an appropriately skilled workforce.
30 Table 3.3: Ratio of 0-15 Year Olds to Business Population 2008 Location Resident Business Ratio of 0-15 Year Population Aged Population Olds to 0-15 Years (2008) Businesses Sandwell 56,400 8,875 6.35 Walsall 50,000 7,910 6.32 Wolverhampton 43,200 8,180 5.28 Dudley 54,000 10,875 4.96 Birmingham 209,600 33,745 6.21 Source: ONS - NOMIS
Key Issues
Sandwell’s comparatively low business density.
Comparatively high ratio of young people to businesses, due to enter the labour force in the near future.
SANDWELL’S BUSINESSES BY SIZE
Economic Context
Business size is influential in terms of business behaviour. Size affects ability to raise finance, accept large orders, conduct research and development and the propensity to train employees. It also affects a businesses ability to provide support in areas such as legal advice. Critically, large companies tend towards cost control in order to increase profitability where smaller businesses may expand, thereby providing new job opportunities in the process.
Large companies also have the size and muscle to force gains from suppliers through demand price cuts. Small companies are less likely to be able to achieve this.
Figure 3.1 identifies that within Sandwell’s SME sub group there is a noticeably lower incidence of micro businesses employing up to four people and companies employing between one and ten people than regionally and nationally. This coincides with Sandwell’s low level of self employment (see page 78) and may reflect factors such as a comparatively low level of home ownership which can reduce potential to access investment funding.
31 Figure 3.1: Proportion of Local Units by Employment Size Bands 2009 Proportion of local units by employment size bands, 2009
Percentage Sandwell West Midlands England
80
70
60
50
40
30
20
10
0 0 - 4 5 - 9 10 - 19 20 - 49 50 - 99 100+ Source: UK Business: Activity, Size and Location, ONS Source: ONS (2010) UK Business Activity, Size and Location
The Borough is however characterised by a higher proportion of larger SMEs in terms of both turnover and employment (see table 3.4).
Table 3.4: Proportion of Companies by Size of Employees 2008 Businesses: 2008 Number of West Great Dudley Sandwell Walsall Wolverhampton England Employees Midlands Britain 1-10 83.4% 79.8% 81.8% 81.8% 84.2% 85.3% 85.0% 11-49 12.9% 14.8% 14.1% 13.9% 12.0% 11.2% 11.5% 50-199 3.3% 4.6% 3.3% 3.7% 3.1% 2.8% 2.8% 200 or more 0.5% 0.9% 0.9% 0.7% 0.7% 0.6% 0.7% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: ABS/ONS (2009) Numbers of companies by size of employees 2000/08
Data for 2007 and 2008 in table 3.5, showing the number of new businesses banded by numbers employed indicates that Sandwell is performing on a level with its Black Country neighbours for new businesses employing up to four people.
Table 3.5: Number of New Businesses in the Black Country Employment Size Band 0 - 4 5 - 9 10 - 19 20 + Total England 217,365 14,040 5,210 2,280 238,895 West Midlands 18,835 1,250 475 190 20,750 Black Country 3,250 200 95 45 3,590 2008 Dudley 1,015 55 25 5 1,100 Sandwell 830 45 20 20 915 Walsall 690 45 20 10 765 Wolverhampton 715 55 30 10 810
England 245,265 14,515 5,310 1,075 266,165 West Midlands 22,125 1,330 460 110 24,025 Black Country 3,780 245 75 15 4,115 2007 Dudley 1,155 70 20 5 1,250 Sandwell 920 75 20 5 1,020 Walsall 855 50 15 0 920 Wolverhampton 850 50 20 5 925 Source: Black Country Consortium (2010)36
32 Key Issues
Relatively high proportion of SMEs.
Smaller companies are least able to obtain finance, force price advantages from suppliers and to cut costs and overheads to boost margins during an economic downturn.
Lower proportion of micro businesses employing up to four people than the region.
SANDWELL’S ENTERPRISE COUNT BY STANDARD INDUSTRIAL CLASSIFICATION (SIC)
Economic Context
A diversified local economy providing a wide range of products and services minimises the effects of economic shock as experienced by Sandwell’s manufacturing sector during the recent economic downturn.
Historically, economies that have been dominated by one or a limited number of sectors, have tended to be characterised by reduced economic performance, high levels of deprivation and problems meeting the challenges of economic change. Sandwell shares some of these characteristics but seeks to avoid the worse effects by diversifying its economy at every available opportunity.
The sectoral distribution in table 3.6 shows how Sandwell’s economy is focused on manufacturing, construction, wholesale and retail. This suggests that the local economy has a considerable amount to gain by diversifying into new sectors and developing a profile that corresponds more closely with that of England as a whole.
Manufacturing, wholesale and retail, plus transport and storage are particularly strongly represented within Sandwell’s economy when compared with the West Midland region and England as a whole. This reflects its long tradition of activity in the manufacturing sector, as well as its central location with markets containing 91.6% of England’s population living within 150 miles of the Borough.
Whilst most Standard Industrial Classification (SIC) categories are present within Sandwell’s economy, some are particularly poorly represented when compared to the West Midland region and England. The most notable are higher value adding service sector occupations such as Professional, Scientific and Technical (SIC 69-75), and Information and Communications (58-63). Importantly, these are the sectors where developed western economies are most likely to position their future comparative advantage within a globalised world economy.
33 Although manufacturing has traditionally provided on-going opportunities to increase productivity, this by definition tends to involve fewer employees with considerable implications for the future employment of local people.
Table 3.6: Enterprise Count by SIC 2007, March 2009 Enterprise Count SIC 2007 England England WM WM Sandwell Sandwell Total % Total % Total % Agriculture, Forestry & Fishing (01-03) 91,650 4.97% 11,320 6.39% 5 0.07% Mining & Quarrying (05-09) 740 0.04% 40 0.02% 0 0.00% Manufacturing (10- 33) 115,690 6.27% 15,215 8.59% 1,035 15.24% Electricity, Gas, Steam & Air Conditioning Supply (35) 310 0.02% 20 0.01% 0 0.00% Water Supply, Sewerage & Waste Management (36-39) 4,840 0.26% 585 0.33% 40 0.59% Construction (41-43) 246,210 13.35% 23,730 13.39% 830 12.22% Wholesale & Retail Trade (45-47) 315,225 17.09% 33,470 18.89% 1,715 25.26% Accommodation & Food Services Activities (55-56) 110,560 6.00% 10,425 5.88% 465 6.85% Transport & Storage (49-53) 60,500 3.28% 7,045 3.98% 425 6.26% Information & Communication (58- 63) 137,190 7.44% 9,595 5.41% 265 3.90% Financial & Insurance Activities (64-66) 38,585 2.09% 3,150 1.78% 115 1.69% Real Estate Activities (68) 66,990 3.63% 5,810 3.28% 210 3.09% Professional, Scientific & Technical (69-75) 287,760 15.60% 23,030 13.00% 510 7.51% Administrative & Support Services (77- 82) 136,865 7.42% 12,935 7.30% 450 6.63% Public Administration (84) 2,460 0.13% 220 0.12% 0 0.00% Education (85) 27,315 1.48% 2,510 1.42% 70 1.03% Human Health & Social Work (86-88) 66,755 3.62% 6,530 3.69% 265 3.90% Arts, Entertainment & Recreation (90-93) 50,845 2.76% 3,250 1.83% 85 1.25% Other Services (94- 96) 83,505 4.53% 8,315 4.69% 305 4.49% Activities of Private Households (97-98) 0 0.00% 0 0.00% 0 0.00% Extraterritorial Bodies (99) 35 0.00% 0 0.00% 0 0.00% All Employers 1,844,030 100% 177,195 100% 6,790 100% Source: Inter-Departmental Business Register (IDBR) and ABI (March 2009)
34 Key Issues
The dominance of low value adding and low growth sectors.
Low resilience to economic change.
BUSINESS TURNOVER
Economic Context
Business turnover, the total sales revenue of a business, is a key measure of demand for the products and services of Sandwell companies. It can also give an indication of the output of the company in terms of its size and value generated. A healthy economy would expect to see a high level of demand for its products but this does not automatically translate into profitability as competitive pressures can force businesses to lower their margins in order to survive.
Table 3.7, based on the Sandwell Business Survey (Sandwell MBC, 2010g)37, shows respondents classifying themselves in terms of turnover. The largest category consists of respondent companies with a turnover of £1 to £10 million. This suggests that Sandwell’s SME population is skewed towards the higher end of the category.
Table 3.7: Approximate Turnover of Sandwell Businesses 2010 Approximate turnover of Sandwell Businesses responding to the Sandwell Business Survey 2010 Below £50,000 5.7% £50,000 -£249,999 22.9% £250,000 - £999,999 29.0% £1,000,000 - £9,999,999 37.4% £10,000,000 and over 5.0% Source: Sandwell MBC (2010g), Sandwell Business Survey
A major concern regarding Sandwell’s current sectoral composition is the dominance of lower value added activities and the vulnerability this creates in relation to tradable goods and services produced elsewhere in an increasingly competitive and globalised economy. The Experian Resilience Index (2010a)38 shows Sandwell to be in the lowest quartile for sectors resilient to change in the economic climate (305 of 324 districts). The Index also places Sandwell in the lower quartile for high growth sectors (314 of 324 districts).
In terms of turnover, Sandwell’s dominant sectors are retail and wholesale, closely followed by manufacturing (see table 3.8).
Sandwell’s company profile measured through turnover (operating revenue) is generally consistent with that of the other Black Country boroughs (MINT, 2010)39. However, the Borough ranks lowest in terms of the number of businesses with a turnover of £50 to £100k and those between £250 and £500k. Sandwell ranks first however among the four Black Country Boroughs
35 for companies with a turnover of between £1 and £10 million per annum. A significant observation arising out of this analysis is the greater intensity of business location in Birmingham compared to the Black Country as a whole. However, it is possible that Birmingham’s figure is distorted by a larger number of holding companies and registered offices being located there.
Table 3.8: Enterprise Turnover by Industry England England WM WM Sandwell Sandwell Agriculture 23,444,273 0.84% 2,261,838 0.99% 0 0.00% Mining and Quarrying *67,018,359 2.39% *233,101 0.10% 0 0.00% Manufacturing (10-33) *407,035,389 14.53% *46,656,512 20.41% 2,345,680 23.31% Electricity, Gas 51,271,613 1.83% D/S D/S D/S D/S Water supply *22,259,173 0.79% *2,181,453 0.95% 255,383 2.54% Construction (41–43) 213,256,879 7.61% 22,595,194 9.89% 531,391 5.28% Wholesale and Retail (45–47) 974,442,633 34.79% 62,883,124 27.51% 2,899,318 28.81% Accommodation and Food Services (55–56) 67,171,838 2.40% 9,788,997 4.28% 87,026 0.86% Transport and Storage (49-53) 121,720,062 4.35% 6,960,426 3.05% 1,091,032 10.84% Information and Communications (58–63) 172,903,524 6.17% 5,270,370 2.31% 68,889 0.68% Financial and Insurance (64–66) N/D N/D N/D N/D N/D N/D Real Estate (68) 48,676,816 1.74% 4,137,871 1.81% 282,364 2.81% Professional, Scientific and Technical (69–75) 179,564,910 6.41% 9,061,911 3.96% 149,745 1.49% Admin and Support (77-82) 132,207,618 4.72% 9,336,722 4.08% 248,421 2.47% Public Admin (84) 22,491,152 0.80% 455,121 0.20% 0 0.00% Education (85) 56,145,237 2.00% 8,365,302 3.66% 100,470 1.00% Human, Health and Social Work (86-88) 128,936,460 4.60% 13,011,393 5.69% 896,304 8.91% Arts, Entertainment and Recreation (90-93) 76,758,509 2.74% 1,634,280 0.72% 48,745 0.48% Other Services (94-96) 29,518,435 1.05% 2,884,248 1.26% 98,775 0.98% Activities of Private Households (97- 98) 0 0.00% 0 0.00% 0 0.00% Extraterritorial Bodies (99) D/S D/S D/S D/S D/S D/S
2,801,112,768 100% 228,564,890 100% 10,064,308 100% Source: Interdepartmental Business Register (IDBR or ABI – March 2009)
36 NB: D/S= data suppressed for data protection reasons, * includes suppressed data
Key Issues
The need to diversify Sandwell’s economy into sectors not currently well represented, including the environmental and low carbon sectors.
BUSINESS PROFITABILITY
Economic Context
Business profitability represents a key component of local competitiveness and a potential source of increased local wellbeing where profits are redistributed within the local economy. These positive benefits can be undermined where profits are not distributed locally or not reinvested to create new productive capacity.
Sandwell’s business profitability (before tax) appears to be strongest at the higher end of the profitability spectrum. MINT (2010)40 shows 87 Sandwell businesses with profitability before tax of between £250k and £1000k. This is the highest score of the four Black Country boroughs. The data suggests that Dudley performs best at lower levels of profitability, e.g. between £1k and £250k, with Sandwell coming to the fore between £250k and £500k. This is probably due to a higher concentration of smaller, owner led businesses in Dudley, probably unincorporated in many cases. MINT shows Dudley to have 6,223 unincorporated businesses, Sandwell 5,136, Walsall 4,673 and Wolverhampton 4,364.
Experian’s Resilience Index (2010a)41 places Sandwell in the upper middle quartile (score 108 out of 324) among all districts for ‘Adaptive Companies’. This measure, ‘based on balance sheet data, shows the number of companies that have shown signs of distress in the past but recovered’. This suggests that Sandwell businesses are relatively well placed to withstand economic fluctuations in economic activity.
A specific problem highlighted by the Resilience Index is that of ‘Days Beyond Terms’ (DBT)3. The data shows Sandwell to be in the lower quartile (ranking 299th) on this measure out of 324 districts. The Index also shows Sandwell to be in the bottom quartile for insolvency (319 from 324 districts). This position may reflect the SME profile of the borough’s businesses and their inability to put pressure on larger businesses with whom they trade to offer better response to invoicing or equally the inability of other SMEs to pay their bills quickly.
3 DBT – The length of time taken to pay over and above the agreed invoice payment period.
37 Key Issues
Poor DBT record and the pressure this puts on company cash flow
3.3. SANDWELL’S BUSINESS STOCK
THE STATUS OF SANDWELL BUSINESSES
Economic Context
Companies quoted on the stock market have the advantage of access to international funding and are subject to the rigours demanded by international investors and the market place. Strategically, these and other large scale businesses are important to a local economy. A lack of quoted companies represents a disadvantage in relation to accessing the large quantities of capital and skills required to capture the advantages provided by new technology, production techniques and innovation in terms of product and service development.
Sandwell has two quoted companies (MINT, 2010)42, the lowest number in the Black Country and at 6,258 ranks second to Dudley in the number of unquoted businesses. The Black Country as a whole has only 59% of the number of unquoted businesses located in Birmingham.
Measuring unincorporated businesses ranks Sandwell (5,136) second, behind Dudley (6,223) for the Black Country boroughs. However, the unincorporated business count for the Black Country as a whole (20,396) exceeds Birmingham’s (18,039).
The Sandwell Business Survey (Sandwell MBC, 2010g) showed 79% of respondents to describe their company status as a limited liability company. A total of 9% said they are a limited partnership and 2% a non-profit making unit.
Additionally the survey asked businesses how long they have been established in the Borough. Over half the sample said they have been operational in Sandwell for less than 20 years. In contrast almost 4% said they have been operational within the Borough for more than 100 years (see table 3.9).
38 Table 3.9: Duration Companies have been Located in the Borough 2010 Duration companies responding to the Sandwell Business Survey (2010) said they have been located in the Borough. Less than 12 1.1% 21-30 years 15.4% months 1-2 years 2.2% 31 – 50 years 17.1% 3-5 years 9.9% 51 -99 years 5.0% 6-10 years 22.0% More than 100 3.6% years 11-20 years 23.7% Source: Sandwell MBC (2010g), Sandwell Business Survey
The Sandwell Business Survey (Sandwell MBC, 2010g) also showed a high proportion of respondents to be ‘independent’ companies with locally based head offices. A total of 88% of respondents said they are not part of a larger group and 94% describe their head office as local.
Key Issues
The low number of public quoted companies.
The high proportion of unquoted businesses.
The high proportion of local companies that have been operational in the borough for less than 20 years.
The high proportion of independent companies with their head office within the Borough.
BUSINESS BIRTHS
Economic Context
The creation of new businesses has both positive and negative connotations. It can reflect a high degree of entrepreneurialism in a local economy or a situation where a lack of employment opportunities makes self employment a more attractive choice. A high rate of business deaths can reflect problems such as demand deficiency in the wider national economy, or specifically at local level where the level of economic performance and well being is subdued.
Without enterprise growth Sandwell will be unable to provide employment opportunities for local people and will fail to create the wealth that circulating within the local economy, serves to increase the social well being of the Borough. Each new business creates employment to a varying degree and has three multiplier effects. These are supply chain impacts (Bryson, 2006: 25)43, ‘re-spending effects’ (job gains or losses affect spending in Sandwell’s economy) and government employment effects (tax yield). Micro businesses have an inherent tendency to be innovative and have a capacity to adapt. It is therefore clearly in Sandwell’s interest to encourage entrepreneurial growth wherever the opportunity presents itself.
39
Recent data from Experian (2010b)44 shows that the number of small business entrepreneurs in the UK has increased sharply during the last five year period. ‘The massive growth in one or two man businesses has fuelled a 41% increase in the total number of companies’. Experian also say that, over the last five years, these small businesses have also managed to maintain the lowest insolvency rate and second healthiest financial strength score compared to other types of business’.
Table 3.10 shows the propensity of the region’s districts to create new businesses over an extended period of time. The entrepreneurs referred to are the individuals that deliver new businesses. The Index of entrepreneurialism is based on net increase in VAT registrations expressed as a percentage of population. The baseline for the West Midlands is 100; therefore Sandwell’s figure of 92 suggests 8% less entrepreneurial activity than the Region as a whole.
Table 3.10: Historical Levels of Entrepreneurialism for the West Midland Region Area 1994 1998 2002 2006 2007
West Midlands 100 100 100 100 100
Warwickshire County 104 113 116 115 121
Worcestershire County 114 106 107 111 113
Solihull 110 112 102 121 112
Coventry 84 98 90 98 108
Staffordshire County 101 98 98 103 99
Herefordshire 88 98 96 95 99
Birmingham 107 105 104 99 97
Shropshire County 94 101 94 108 95
Telford and Wrekin 103 100 113 99 94
Wolverhampton 105 98 96 99 94
Dudley 109 97 93 101 93
Sandwell 97 88 95 93 92
Walsall 89 90 96 90 91
Stoke-on-Trent 89 80 88 93 87
Source: AWM (2010) The Black Country Economy: Structure performance challenges45.
40 BUSINESS SURVIVAL
Economic Context
Business survival rate is generally used as an indicator of economic well being with a high rate of survival indicating economic wellbeing and a high rate of death suggesting a reduced level of performance within the local economy.
Compared to The West Midlands and England, Sandwell has a subdued rate of survival in terms of its newly born companies (see table 3.11).
Table 3.11: Percentage of One, Three & Five Year Survival Rates for Businesses, 2002/07 Births Births Births Births Births Births Area 2002 2003 2004 2005 2006 2007 Dudley 92.9 93.9 94.1 95.9 96.9 93.8 Sandwell 92.7 91.6 94.1 93.4 95.7 94.9 Walsall 93.9 94.2 93.8 94.7 97.0 97.8 One year Wolverhampton 89.9 92.3 93.5 89.7 96.4 94.3 West Midlands 92.1 92.5 94.1 94.4 96.6 95.2 England 92.9 92.6 94.2 94.3 96.5 95.5 Dudley 62.2 63.6 65.5 67.1 Sandwell 60.6 57.4 63.3 62.1 Walsall 63.4 64.9 63.2 62.0 Three years Wolverhampton 51.1 57.4 58.5 54.3 West Midlands 63.2 64.8 65.8 64.6 England 62.7 63.5 65.2 64.6 Five years Dudley 44.9 46.1 Source: Black Country Business Barometer (June 2010)
Sandwell has a lower business survival rate after one year than the Region for four of the years between 2003 and 2007. The rate is lower than England’s after one and three years for all years 2003 to 2007.
Key Issues
Comparatively low business survival rate.
BUSINESS GROWTH
Economic Context
Research (NESTA, 2009)46 suggests that young firms are more likely to grow fast, but still only a small proportion of new firms succeed in achieving high growth status. Mature firms therefore constitute a large proportion of high growth firms.
41 Although business growth is a key objective of economic regeneration policy, the benefits are often felt unevenly and well beyond a single district’s boundary. A contraction in manufacturing employment in Sandwell may not necessarily be offset by an expansion of suitable employment opportunities in other sectors.
Each job creates three categories of multiplier effect (Bryson, 200647 see Appendix Two):
• Impacts on suppliers, • Multiplier effects – impacts of job loss or gain on sectors that are recipients of employees expenditure, • Government employment effects – taxes that support local and national government employment.
Getting Sandwell and the Region up to speed in creating high growth firms is one of the key challenges for the future. The Annual State of the West Midlands Report (WMRO, 2010a)48 shows the Region to be at the bottom of the league table in its share of fast growing companies needed to create private sector jobs.
Research quoted in the report (WMRO, 2010a) shows that at a national level, around half of new jobs are generated by six percent of high growth firms. ‘If [Sandwell] and the regional economy were brought up to this level by focusing on areas including business and financial services plus high technology manufacturing, it could lead to more than 200,000 additional jobs’49.
Sandwell has fewer businesses in the potential growth sectors such as high- tech industry and the fast growing service sector. Research by Experian (2010a)50 ranks Sandwell in the lower quartile nationally in terms of high growth sectors, business insolvency (the number of businesses that have gone out of business in the previous nine months) and representation from resilient sectors. These are the sectors that are least affected by the economic downturn such as agriculture, banking and insurance.
Examining jobs growth before and during the recession shows the extent to which certain sectors suffered within the Sandwell economy. Figure 3.2 shows annualised employment growth in Sandwell for 2006/07 and 2008/09. Manufacturing, already in decline in employment terms, lost more jobs during the recession – a common story across the UK. Other personal services saw employment growth of nearly 1% p.a. pre-recession but this decreased to around 0.2% per annum during the recession. Transport and Communications, and hotels, while not growing strongly before the recession, went from positive employment growth to negative employment growth. However, some sectors faired quite well in Sandwell with public sector employment increasing along with Business and Financial Services, and Construction.
42 Overall, jobs have been lost in those industries where a lesser proportion of higher level skills are required, such as hotels, restaurants, and other personal services.
Figure 3.2: Annualised Growth in Employment in Sandwell (Pre & Post recession)
Other personal Services
Public Sector
Business Services
Financial Services
Transport & Communication 2006‐07 Hotels 2008‐09 Distribution
Construction
Utilities
Manufacturing
Primary
‐0.6 ‐0.4 ‐0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2
Source: Oxford Economics, 2010 in Scott Wilson (2010)51
However, since 2003, Sandwell’s record in terms of employment growth within the small business sector has been positive. Performance for the period 2002 to 2008 has exceeded that for England, the West Midland Region and its Black Country neighbours. In terms of job growth, Sandwell’s figure is positive when compared to its Black Country neighbours (see table 3.12).
Table 3.12: Percentage of Small Businesses showing Employment Growth by Area 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 England 10.6% 10.2% 11.4% 14.4% 14.2% 14.2% West Midlands 10.8% 10.1% 11.2% 14.3% 14.4% 14.4% Black Country 11.0% 10.3% 11.6% 14.3% 14.5% 14.7% Dudley 10.7% 9.8% 10.8% 14.3% 14.5% 14.7% Sandwell 11.8% 11.1% 12.4% 16.5% 15.3% 15.2% Walsall 10.2% 10.0% 10.7% 14.0% 14.2% 14.1% Wolverhampton 11.5% 10.1% 12.3% 12.6% 13.9% 14.9% N.B: Data for 2002/03 to 2007/08 has been revised by ONS after an error was found in the data supplied last year. Source: ONS / Black Country Consortium (2010)
At present, a longer term overall employment growth for all company sizes in Sandwell shows short term future performance to be for growth, but below the regional and national figure (see figure 3.3).
43 Figure 3.3: Employment Growth (Annualised Percentage Change)
2.0
1.0
0.0 Sandwell West Midlands 2007 2008 2009 2010 2011 2012 2013 2014 2015 ‐1.0 UK
‐2.0
‐3.0
Source: Oxford Economics, 2010 in Scott Wilson (2010)52
Overall, Sandwell’s growth record can be described as one which behaves in a more erratic and extreme way than the region and UK. This may be a result of the high proportion of SMEs active in the local economy.
Key Issues
A low incidence of entrepreneurialism.
Poor representation in growth sectors.
The need for policy to concentrate on encouraging innovative, high growth firms.
Sandwell SMEs have consistently shown employment growth when compared with local comparators.
A lower level of overall employment growth for all Sandwell companies over the medium term.
A comparatively low level of business registration and closure but overall positive on net change across all comparators.
3.4. FACTORS AFFECTING SANDWELL’S OUTPUT
PRODUCTIVITY
Economic Context
Productivity growth (or increased Gross Domestic Product) represents the most important variable for local economies seeking to improve economic and
44 social well being. When Sandwell’s workers produce more goods and services for every hour worked the level of wealth created for distribution increases.
The productivity of Sandwell’s workers depends on their skills, the amount of capital invested in them individually and the tools they use to do their jobs. Productivity also depends on the rate of implementation of innovations such as the adoption of new technology as well as the generation of ideas that lead to more efficient ways of conducting business and new products.
Sandwell’s productivity is relatively poor. The Borough is ranked within the bottom 25 in the UK on the ‘UK Competitiveness Index 2010’ (Black Country Consortium, 2010b53). The Black Country Consortium quote54 an output gap of £5bn annually against the output of the wider UK. Emerging data suggests that this may have increased to £6.2bn annually for 2008.
The basic measure of productivity for the UK is Gross Value Added. Gross Value Added per head of Sandwell (and Dudley) workers is comparatively low when compared to both the wider West Midland region and the UK as a whole, and this has declined over time. Between 1999 and 2007, GVA per head measured at current basic prices reduced from 85.7% of the UK baseline to 74% (see figure 3.4).
Figure 3.4: Headline GVA per head Indices for NUTS Area
Headline Gross Value Added (GVA) per head Indices for NUTS3 Area at Current Basic Prices
100%
80%
60% 1999 40% 2007
20%
0% Sandwell & Dudley as % Sandwell & Dudley as % Sandwell & Dudley as % of UK of England of West Midlands
Source: ONS Statistical Bulletin, Regional, Sub Regional and Local GVA 2009, 9/12/2009
Sandwell’s performance has declined against regional and national comparators over time. Research by AWM (2010)55 gives Sandwell a score of 0.6 (on a scale where 0.1 is good and 1.0 is poor) for Gross value Added per Head.
45 Projections from Oxford Economics (Scott Wilson, 201056) predict annual GVA growth for Sandwell. Table 3.13 shows the sectors predicted to deliver this.
Table 3.13: GVA Growth in Aggregated Sectors (Annualised Percentage Change) Sandwell West Midlands 2009-15 2016-22 2009-15 2016-22 Primary -4.1 -4.1 0.2 0.3 Manufacturing 2.1 -0.1 2.3 0.2 Electricity, gas & water supply 2.6 2.3 1.7 0.5 Construction 3.2 2.8 1.7 1.6 Distribution, hotels and transport 3.0 2.2 3.0 2.2 communication Financial and Business Services 4.5 3.9 3.1 3.1 Public Sector 0.7 0.7 1.9 1.7 Total 1.7 1.1 2.0 1.4 Source: Oxford Economics, 2010 in Scott Wilson (2010)57
Manufacturing output in Sandwell is expected to grow over the medium term (2009/15), almost in line with regional growth rates but in the longer term GVA is expected to decline by 0.1 per cent per annum (2016/22). The region does not suffer this contraction in GVA in the long term. Primary sectors see a decline in Sandwell while growing marginally across the region, but construction, financial and business services and electricity gas and water supply are expected to out perform the region in terms of GVA growth.
Growth in output in sectors such as Construction, and Financial and Business Services in Sandwell may not be sufficient to generate rising employment. Over the period to 2015 employment in Sandwell is expected to decline by 0.9 % p.a. between 2009 and 2015 compared to a decline of 0.6% p.a. in the region. This decline widens in the long term with Sandwell shedding around 1% of employment per year. Public sector employment is expected to share in this trend, where a greater proportion of jobs will be lost in the Borough compared to the region. This reflects the expectation that private sector contractors will off set some of the wider decline in ‘public sector’ activity. However, this does not offset the absolute declines in employment across the local economy, over and above rates expected for the region. This will present major challenges for the borough.
Table 3.14 indicate how Sandwell’s sectors are expected to be affected by future cuts in government spending.
46 Table 3.14: Estimated Private Sector Output Losses in 2014/15 due to Reduced Public Sector Demand Sectors Estimated Gross Output Loss as a % of Gross loss (£bn at 2007 prices) Output in Sector Business services 11.9 3.9 Construction 10.6 5.1 Manufacturing 9.3 2.0 Transport & 3.2 1.9 Communications Distribution, Hotels & 1.1 0.4 Catering Financial Services 2.0 1.1 Others Sectors 8.3 1.5 Total Private Sector 46.4 2.1 Source: PwC Analysis58
The government’s review of public expenditure (September 2010) concluded that the UK economy is expected to suffer a reduction in output. Manufacturing and construction which are both key to Sandwell’s GDP are the local sectors expected to be most adversely affected. The business services sector which is one of Sandwell’s sectors for future development is expected to suffer the heaviest losses in absolute terms. However, government is seeking to transfer activity within this category from the public to the third and private sectors. Business service companies in Sandwell may therefore find opportunity in cuts to public sector output.
Key Issues
Sandwell’s low comparative gross value added per head.
Demand for manufactured goods, locally and worldwide.
Contraction in public sector employment
Transfer of business opportunities from the public to private and third sectors.
FOREIGN INVESTMENT IN SANDWELL
Economic Context
Attracting new investment, retaining existing employment and productive capacity all serve to boost the output of Sandwell’s economy. In many cases, Foreign Direct Investment (FDI) also supports economic development by introducing new methods of working and providing opportunities for training that would not have existed previously. On this measure, site and labour availability are key concerns, closely followed by issues of infrastructure and access to the supply chain and customers. Foreign direct investment is usually viewed as positive but can sometimes prove harmful to existing businesses and workforce if jobs and investment plus profits are later transferred elsewhere.
47
The Experian Index of Resilience (2010a)59 shows Sandwell to be in the upper middle quartile in terms of foreign ownership (102 out 324 districts). That is businesses with a foreign parent company.
Figure 3.5 shows that Sandwell’s success in achieving inward investment is broadly consistent with that of its Black Country neighbours. However, the picture changes when compared to regional locations such as Coventry, Solihull and Warwickshire which gain from closer proximity to the region of the South East. The strong performance of Telford and Wrekin as an investment location suggests that proximity to a rural environment and its attendant quality of life are a key factor with which urban economies such as Sandwell have difficulty competing. In terms of jobs delivered by FDI, Sandwell and the Black Country boroughs (with the exception of Walsall) have a poor level of achievement in comparison to Birmingham, Coventry and Solihull.
Figure 3.5: Average FDI Jobs per 100,000 Population 1999/00 to 2008/09
Source: AWM (2010)60
Key Issues
Low flow of inward investment into Sandwell compared with Birmingham, Coventry and Solihull.
Ensuring FDI is attracted by suitable sites and an attractive offer to business in terms of overall support.
48 INVESTMENT IN SANDWELL BUSINESSES
Economic Context
Two forms of incorporated business exist in the UK. Public companies fulfilling certain requirements designed to protect the investing public are listed and quoted on the stock exchange. The other category, private companies, are organisations that permit a limited number of shareholders to enjoy limited liability, files accounts but is unable to offer shares for public conscription.
Unincorporated status sees the owner as the business who receives all profits and accepts all risk.
Funding for quoted companies is therefore obtained from the public via the stock market or from private shareholders / owners for unquoted companies. Shareholder funding represents total money value of stock belonging to shareholders including the balance of share capital, all profits retained and money classified as reserves. It can be a positive measure showing a healthy balance sheet but negative when resulting from continuous losses sustained by corporations.
The Sandwell Business Survey (Sandwell MBC, 2010g) asked local companies about their investment intentions. In total 64% said they have not invested in their Sandwell site within the last 12 months and 28% expect to expand capital investment over the following twelve month period.
As Sandwell and the Black Country boroughs have few quoted companies (MINT, 2010)61 most local businesses rely on private owners / shareholders and their potential borrowing power to source and fund future business growth. This may not be a problem if a privately owned business is cash rich but can constrain growth during periods when credit is hard to come by or expensive as has been the case recently.
(MINT, 2010)62, Sandwell ranks highest within the Black Country for businesses with shareholder funding valued at between £1,000k and £100,000k. Dudley businesses register the highest levels of shareholder funding within the Black Country for all levels between £1k and £1,000k. Overall, shareholder funding seems to be lower in Wolverhampton and Walsall than for Sandwell and Dudley.
Key Issues
Access of local businesses to suitable funding sources.
Approximately two thirds of local companies saying they have not or do not intend to invest in their Sandwell site.
49 ENTERPRISE SUPPORT
Economic Context
Until the general election of 2010, enterprise support in Sandwell has been provided through the Council, Business Link West Midlands, Advantage West Midlands and the Chamber of Commerce. Post election, it is intended that enterprise support will be delivered primarily via a new local enterprise partnership (LEP). Enterprise support will be supplemented by national provision.
Data from Sandwell’s Albion Business Investment District (which straddles the boundary of Oldbury and West Bromwich) conducted by M&T (2010)63 has examined business support its businesses have received from local organisations. The largest proportion of respondents said they have received no support at all. However, Sandwell Council ranked second with more than 30% and Business Link third with slightly less than 30%. ‘Overwhelmingly, respondents would welcome further information regarding support services available to them’. The Report concludes that there is further scope for business support in the area and noted that respondents that had successfully accessed support from one agency often listed others.
Key Issues
Within the context of an evolving agenda, ensure that Sandwell businesses have access to clear, unambiguous enterprise support.
SANDWELL SUPPLY CHAINS
Economic Context
Manufacturing Advisory Service see supply chain coordination as a key way forward to enable smaller companies access to Tier 1 and 2 suppliers who feed into prime contractors.
The Sandwell Business Survey (Sandwell MBC, 2010g) asked companies to say where the primary location of their suppliers is. The highest proportion said they are located across the country (37.5%), and the second highest ranking described the location as being within the West Midland metropolitan area (34.8%). Sandwell ranked third (19.5%) and international locations last at 15.1%.
The survey (Sandwell MBC, 2010g) also asked local businesses to describe where their main product or service ultimately goes to. A total of 55% said their main product or service goes directly to the end customer and 44% of respondents said another business within the supply chain.
50 Key Issues
Ensure enterprise support for Sandwell companies is available in terms of targeted marketing advice, coordinated guidance and advice.
Continuation of the boroughs procurement network, Find it in Sandwell.
PRODUCT AND PROCESS INNOVATION (APPLICATION OF TECHNOLOGY)
Economic Context
Times of economic uncertainty and recession create opportunities for leaps forward in terms of innovation and technological break through (WMRO 2009). As the need for commercial survival intensifies, new ideas emerge which create the forerunners. ‘Creative destruction’ as Schumpeter (1942)64 called it helps redesign the map of competitors’ strengths and weaknesses.
The ability of Sandwell’s economy to grow beyond the current recession therefore rests on its capacity to take the best of what already exists and adopt new and improved ways of operating. For Sandwell this will involve significantly increasing the knowledge component of its manufacturing base, moving into markets for new products and services and creating an environment where new ideas can be implemented and grow.
Sandwell’s partners in regeneration have made significant efforts to provide local businesses with support to help them grow over time. The links between innovation and growth suggest that supporting innovation is a crucial channel to foster business and employment growth (NESTA, 2009)65. This report has concluded that a firm experiencing a 10% increase in sales of its products adds almost 1.5% to its employment growth rate.
Innovation can be about invention as well as adaptation and is particularly dependent on strong leadership and management. It focuses on business growth, competitiveness and profitability with a particular focus on optimising price without losing volume. For companies (including those located in Sandwell) to continue to operate and make a profit, they will have to innovate or see customers leave over time for firms that produce more up to date products and services. This represents a particular challenge for many Sandwell businesses who operate at the lower end of the value chain and is a key reason that the Borough’s Economic Prospectus seeks to promote diversification into new products and markets.
A report by NESTA (2009)66 found that high growth businesses can occur in any sector but that the key variable driving growth is the propensity to innovate.
51 Innovation is most likely to occur in areas with a highly skilled and qualified workforce. Research by AWM (2010b)67 identifies Sandwell’s proportion of employment in the private sector, knowledge intensive activities and working population with NVQ level four qualifications as its greatest weakness.
The application of information technology can be measured using Full Time Equivalence (FTE). This is a round up of the number of hours worked rather than people. For example, two people working 15 hours each would be classed as one FTE.
WMRO (2009)68 suggests that the West Midlands Region has a history of ‘doing knowledge intensive manufacturing very well’. Sandwell will need to recognise and build on this to improve its cumulative assets.
The Sandwell Business Survey (Sandwell MBC, 2010g) asked about intentions to innovate. In total 35% said they are thinking of entering into a new product or service area. A similar proportion (32%) said they have introduced new ways of working in the previous twelve months. However, the potential to innovate is there as over half (53%) said they belong to formal or informal specialist networks that can help with the adoption of emerging technologies and processes.
Data (AWM, 2010b)69 (see figure 3.6) suggests that Sandwell has the highest proportion in the Region of FTE in manufacturing within the low or medium- low technology categories. This doesn’t necessarily equate to having the lowest proportion of FTE in the Medium-high and High technology sectors. Although Sandwell scores poorly on high technology FTE, for both medium and high categories, Shropshire, Herefordshire and Birmingham score lowest. (NB: Figure 3.6 relates to manufacturing only and not total output.)
Figure 3.6: Proportion of Manufacturing FTEs to all FTEs
Source: AWM (2010b)
52 Patent applications are often used as a measure of innovation. Sandwell specific data (IPO, 2010)70 for 2008/9 on patent applications is not available, but figures show the West Midlands region achieving 7.7% and 7.9% of patent applications granted for the UK as a whole.
Key Issues
Sandwell’s economic output is characterised by a low density of technological utilisation.
Regional data suggests the probability of a low rate of product and service innovation in Sandwell.
MARKET FOCUS OF SANDWELL BUSINESSES
Economic Context
In order to increase the level of wealth generated and circulating within the Borough, Sandwell companies need to maintain and grow the sales of the products and services. This can be achieved by increasing penetration of existing markets and growing markets elsewhere.
The Sandwell Business Survey (Sandwell MBC, 2010g) asked local businesses how they would best describe the location of their customer base. As table 3.15 shows, the national market accounts for almost half of product destinations, whereby international destinations is only 12%.
Table 3.15: Location of Customers of Sandwell Businesses Location of customers of Sandwell businesses Sandwell 14.0% West Midland metropolitan area 29.6% National 44.1% International 12.3% Source: Sandwell Business Survey (2010)
However, when asked about export activity overall, 32% of respondents said that they export either directly or indirectly via an agent. A higher proportion of Sandwell’s output is therefore reaching export markets through other businesses active in the supply chain. In total 23% of respondents have said they expect to enter new markets within the next twelve months.
The Survey seems to contradict evidence provided by The Experian Index of Resilience (2010a)71 which shows Sandwell to be in the top quartile for firms that export (9 of 324) and for firms positioned within an exporting SIC (68 of 324).
53 Research has been undertaken in the past which tends to support the hypothesis that local businesses tend to export most to the countries nearest to them and those within the English speaking world.
Data for 2001 (Dudley MBC)72 examined where to and what Black Country companies exported. Results showed a domination by fabricated metal products, including forging, pattern making, presswork, machinery and equipment. There were district level variations such as the export of chemicals and chemical products from Sandwell.
Other results for Sandwell confirm the dominance of export of manufactured metal products, machinery and equipment with the Borough showing the highest proportion of companies exporting in this sector of all the Black Country authorities. Eire, France, Germany and Holland ranked highest for destination markets within Europe and the U.S. ranked highest in terms of other destinations.
Key Issues
Three transformational sectors (see page 81) have been identified to take Sandwell forward in terms of its economic regeneration over the next few years.
RAISING PRODUCTIVITY IN SANDWELL THROUGH INFORMATION COMMUNICATION TECHNOLOGY
Economic Context
Raising productivity is seen as one of the foremost challenges to improving the UK’s economic performance. There are a number of mechanisms for doing this, and the innovative use of information communication technology (ICT) is one of them73.
The next ten years are likely to see massive changes in the use of ICT, the way we work and understanding as to how local communities can benefit. A significant economic dividend is therefore open to Sandwell’s businesses and residents by getting as many people on line as possible. Economically this will serve to maximise the efficiency with which businesses work and access resources and customers. Socially, previously excluded resident groups will gain access to up to date information and the best prices for goods and services. The lives of individuals and businesses who don’t take advantage of opportunities offered by ICT will become harder. For example, applying for employment is increasingly done ‘on line’ putting anyone unconnected at a disadvantage.
In 2010, Sandwell MBC and its partner BT undertook a study into the current position regarding the availability and take up of broadband services by local businesses and residents74. The key conclusion was that the availability of business broadband services was good, with Sandwell ranked 6th of 34 local
54 authority districts in the West Midlands for broadband take-up. The Report also concluded that the Borough is well served by the provision of broadband infrastructure from a range of service providers, and two local exchanges have been identified by ‘Open reach’ for upgrade to superfast broadband from April 2010.
A second Phase of the Study has made the following observations:
• ‘West Midlands High Impact ICT Strategy’ report estimates a regional GVA uplift of £3bn from better use of ICT by local businesses.
• Minimal information is currently available on the business needs, adaptation and use of broadband and ICT services by local companies in Sandwell.
• A majority of ICT business advice to businesses from local agencies and organisations has been provided via Business Link’s ‘Technology at Work’ programme.
• ‘Technology at Work’ shares common objectives with Digital Sandwell.
• FinditinSandwell can play a key role in Digital Sandwell information capture and briefings to local businesses.
The second phase made a number of key recommendations which are shown in Appendix Three:
The innovative use of ICT is a key mechanism for increasing productivity in Sandwell. Little information is currently known about the ICT needs of local businesses; however, its use is a key component of increasing the competitiveness of Sandwell’s companies.
Key Issues
• Improve information available on the ICT needs of local businesses • Support the increased utilisation se of ICT by local businesses to increase the Borough’s competitiveness Increase the impact of ICT as a component of Sandwell’s overall output.
CRIME AFFECTING SANDWELL BUSINESSES
Economic Context
Crime affecting business is not victimless it acts as a considerable drag on the economic performance of any local economy. Apart from the disruption caused and lost productivity, crime lowers business confidence and raises costs such as insurance cover. In extreme cases businesses may have to move to another area in order to carry on trading or cease trading altogether. The effects are felt by the business, its employees and the entire area.
55
Sandwell’s incidence of crime affecting businesses does not appear to be significantly different to that of its Black Country neighbours. Work undertaken on behalf of the Borough by Forensic Pathways (2009)75 examines this issue in detail by reworking existing Police and Home Office data.
The Study delivered the following results for crime affecting Sandwell businesses:
• Burglary (21.8%) and shoplifting (20.7%) are the main categories.
• Business crime appears to have fallen over time but the value impact of each crime has risen.
• At 21.3% of all crime, Sandwell’s estimate for business related crime compares to 22.1% in Wolverhampton and 23.8% in Dudley. Only Walsall at 20.1% is lower among the Black Country boroughs.
• Factories are most likely to be affected by burglary (30.2%) followed by shops (22%) and offices (11.1%).
• Each week crime affecting business effectively cancels out the GVA of 168 people in the West Midland Region.
Clearly, economic growth in Sandwell and across the wider West Midlands Region is a considerable drag on economic performance. Sandwell’s emphasis on manufacturing makes it particularly vulnerable to burglary of factories.
An additional insight into the effects crime has on local businesses has been provided by the study of the Albion Business Investment District (BID) area (M&T, 2010)76. This shows that a high proportion (71%) of businesses in the BID area have witnessed low level vandalism and two thirds of responding companies have been a victim of crime during the last five years. Over 25% of companies have experienced losses due to crime of over £20k. Expenditure on security has been considerable, with a business typically spending over £10,000 on this issue.
Key Issues
Less business related crime but higher value of each crime, generating need for improved crime prevention
Financial implications of business related crime
Lack of importance attached to business crime, resulting from problems confronting businesses who report crime, e.g. insurance premiums
56 3.5. THE PHYSICAL ECONOMY
ECONOMIC BENEFITS OF A HIGH QUALITY PHYSICAL ENVIRONMENT
Economic Context
There is growing evidence that a high quality physical environmental can have economic benefits both in terms of promoting community wellbeing and increasing the attractiveness of an area to potential investors.
A high quality physical environment can help to promote a healthy community and wellbeing which has a positive impact on the local economy by reducing benefit dependency and absence from work. It has been recognised in both the West Midlands Regional Spatial Strategy and the Black Country Core Strategy that delivering a high quality environment will play an important role in supporting economic growth across the sub-region through; tourist attractions, green industry jobs, attracting inward investment, increasing land values and improving labour productivity.
There is a significant amount of green space within Sandwell (24% of the Borough) (Sandwell MBC, 2010a) 77, with the Green Space Audit of 2006 identifying 300 areas of green space of at least 1 hectare area within Sandwell. The vast majority of the Borough is within requirement of the local indicator of ‘walking distance to at least 1 hectare of community open space’ (400 metres), only a part of Wednesbury Town Centre, West Bromwich Town Centre and a predominately employment area of Oldbury are outside (Sandwell MBC, 2009)78.
To support economic investment, the developing Black Country Environmental Infrastructure Guidance recommends focusing environmental infrastructure in areas where it can support investment within strategic centres, including West Bromwich, and regeneration corridors to support sustainable economic growth. Natural Economy Northwest, a partnership led by Natural England, the Northwest Regional Development Agency and SITA Trust is at the forefront of developing an understanding of the link between the economy and the natural environment in the UK. They set out eleven economic benefits of environmental infrastructure:
• Economic Growth and Investment – the contribution to Gross Value Added by helping to maintain and attract high value industries • Land and Property Values – CABE have developed evidence to suggest that property values increase with proximity to greenspace by about 8% • Labour productivity – Productivity increased and sickness related absenteeism is reduced when employees work in greener and more attractive environments. Furthermore, members of staff tend to stay longer reducing recruitment costs • Tourism – Environmental infrastructure can support tourism directly through visitors to natural attractions and more generally by a reputation for high quality sense of place
57 • Products from the land – Income from agriculture, forestry and biomass • Health and well being – Environmental infrastructure can have considerable health benefits and can reduce the demands on public health care and absenteeism costs • Recreation and leisure – Revenue can be derived from the recreation and leisure opportunities • Quality of Place – Attracts visitors, new residents and roots existing residents to an area. The Urban Green Spaces Taskforce (2002) also suggests that a decline in greenspace weakens community cohesion. Conversely, effective management can help create and reinforce sense of place and reduce crime • Land and biodiversity – Linked to land management industries and natural tourism, but can also attract investment in its own right • Flood alleviation and management – Environmental infrastructure can reduce the impact of flood events and manage flood water effectively, helping to reduce cleanup cost and insurance premiums • Climate change adaptation and mitigation – Similarly to flood risk, environmental infrastructure can help reduce vulnerability to climate change through increased resilience and flexibility. The natural environment also provides opportunities to mitigate climate change through the development of the renewable and low carbon energy sector and carbon sequestration (AECOM, 2010)79.
Some potential opportunities to use environmental infrastructure for economic benefit within Sandwell include:
• Improved environmental infrastructure in the economic regeneration corridors • The growth of bio-crops or other vegetation to remediate contaminated sites • Public realm improvements in employment zones • The improvement of the Borough’s economic gateways • To identify opportunities for cycleway/footpath provision and linkages for a network to serve the Black Country and beyond
The sensitive development of Sandwell’s environmental assets will contribute to the growth of the visitor economy; will contribute to the development of sustainable communities and to the sense of ‘place’. It will also assist in the promotion of the Borough to potential business investors.
Key Issues
• Increase the use of environmental assets to act as an economic driver • Promote the environmental assets of the Borough with potential inward investors • Develop environmental infrastructure for economic benefit, particularly the transformation of lower quality employment land • Identify priority areas for environmental infrastructure to support economic development, particularly in economic gateways, such as
58 around West Bromwich. • Secure and deploy the necessary financial and human resources and investment to ensure that the protection, maintenance and enhancement of Sandwell’s natural environment makes the fullest contribution to Sandwell’s economy.
SANDWELL’S EMPLOYMENT LAND
Economic Context
The availability of ‘fit for purpose’, employment land is vital to the growth of Sandwell’s output, future development and economic well being.
The importance attached to the physical environment from a business perspective is illustrated by a survey conducted within Sandwell’s Business Improvement District area. The study (2010) 80 shows over 60% of respondents saying that their customers are adversely affected by the area in which their company is situated. Land remediation needs to ensure that sites meet the needs of potential business investors in terms of quality, size, shape and location.
Between 1st April 2008 and 31st March 2009, 12.99ha of employment land was developed in Sandwell. This is similar to the trend seen in previous years. In 2008/09 the dominant use in hectares was B2 (general industrial), however in floor space terms the speculative nature and flexibility of a B1 (business, e.g. offices, research premises etc.), B2 and B8 (storage and distribution) use was the most dominant (Sandwell MBC, 2009)81.
In 2008/09, the greatest proportion of Regional Employment Land Study (RELS) sites (over 0.4ha) were built in the Good Quality employment site category.4 Only two categories of sites were developed across the Regional Spatial Strategy portfolio in 2008/09 (other local site – 3.3ha in total, good quality employment site – 7.51 ha in total, sub-regional employment site – 0ha). Considering the downturn this was considered to be a good level of completions (Sandwell MBC, 2009)82.
4 These are sites over 0.4ha, suitable for locally based firms wishing to expand/relocate and unlikely to attract inward investment but capable of commanding local speculative private interest.
59 Figure 3.7: Employment Land Supply by 2008/09
Employment Land Supply by RSS Portfolio 2008/09
60 50 40 30 20
Land inLand HA 10 0 Other Local Site Good Quality Sub-regional Employment Site Employment Site Portfolio Type
Source: Sandwell MBC Annual Monitoring Report, December 2009
Figure 3.7 shows that the greatest amount of employment land supply in 2008/09 was in the Sub-Regional Employment site category (49.78ha). 2008/09 saw an increase of land supply in the other local site category, perhaps reflecting the small scale nature of the development taking place. However, 2008/09 saw a decrease in the supply of good quality employment sites, it should be noted however, that these sites accounted for the greatest proportion of Regional Employment Land completions in 2008/09, so new sites may come forward in the future that meet the criteria for this type of site.
During 2008/09, there were no losses of employment land in Sandwell within employment/regeneration areas, and 1.95 ha was lost in the local authority area; 0.89ha of this was for residential development. Compared to the loss of employment land previously this figure is very low, but perhaps reflects the overall lower level of residential completions that would usually account for a higher loss of employment land.
Future Phasing of Employment Land and Housing Land Supply
The Black Country Core Strategy (Proposed Changes) August 2010, states that the majority of new employment development will be accommodated within the identified Strategic High Quality and Local Employment areas. However, it will be particularly important not to undermine viable businesses on land proposed for housing. Table 3.16 outlines the phasing of employment land and housing proposed in the Black Country Core Strategy. The table shows that the amount of gross employment land in Sandwell in 2016 and 2026 is expected to be higher than for the other three Black Country Local Authorities. Land allocations will be through the Sandwell Site Allocation and Delivery Document. The document will identify sufficient housing and employment land in detail for requirements up to 2021. The Black Country Core Strategy has been considered to be sound by the Planning Inspector, and should be adopted by the Council by the end of March 2011.
60 Table 3.16: Future Phasing of Employment Land and Housing83 Hectares Dudley Sandwell Walsall Wolverhampton South Total Staffs Gross 827 1,251 735 752 21 3,586 Employment Land 2009 Additions to 7 30 28 24 34 123 Employment Land (1) Employment 57 67 105 33 0 262 land redeveloped to housing Gross 777 1,214 658 743 55 3,447 Employment land 2016 Additions to 12 40 39 34 49 174 Employment Land (1) Employment 141 392 86 132 0 751 Land redeveloped to housing Gross 648 850 611 645 104 2,858 Employment Land 2026 (1): Gross new employment land brought forward through additions to stock, as set out in GVA Grimley 2009 Assessment of Employment Sites report Table 3.4. Based on bringing forward of RELS sites.
Employment Led Regeneration Corridors
The Black Country Core Strategy aims to deliver economic growth by focusing on employment led ‘regeneration corridors’ that take advantage of the key transport opportunities and land availability. Within Sandwell, the corridors are:
• Hill Top – the River Tame and the Tame Valley Canal will be significant features of the rejuvenated environment of Hill Top; improvement of open space provision and access to natural green space for residential neighbourhoods. Protection of existing natural greenspace. • Oldbury – West Bromwich – Smethwick – gateway to the Black Country from the south and London and Birmingham City Centre. The area will be a major contributor to the economic prosperity of the Black Country through its high quality employment land locations and major office developments, major environmental infrastructure and public realm improvements. The corridor is well served by a network of parks – Dartmouth Park is a major asset. There will be an emphasis on improving and enhancing links from potential new housing areas into new and existing spaces. This corridor also falls within a geodiversity zone.
61 • West Bromwich strategic centre acts as a key transport hub and an economic gateway which could be enhanced through public realm and green infrastructure (AECOM, 2010)84.
A key issue for the Borough is the availability of high quality employment land and premises, and the balance between development land for housing and for employment use. To promote the Borough to inward investors and businesses within the priority sectors identified within the Economic Prospectus, there is a need to ensure that there are readily available sites and premises. A key issue for the Borough is the lack of funding to remediate land, and the need to look at innovative delivery models to bring sites and premises to the market.
The Black Country Core Strategy sets out the levels of employment land required for a successful Sandwell economy. In the current climate, it is more important than ever that Sandwell MBC is aware of the requirement of local businesses and potential investors in relation to employment land, and that the Borough proactively markets itself with a portfolio of high quality employment sites that can be targeted at the priority sectors identified in the Economic Prospectus.
Key Issues:
• Ensure a balance between employment and housing land to meet the needs of the local economy • Ensure the availability of high quality employment land to attract investors to the Borough • Secure investment to bring land forward so that it is viable for development (remediation/access) • Identify suitable land/premises for Economic Prospectus priority sectors, inward investment and business expansion/relocation • Ensure access to employment locations for Sandwell residents using public transport
SANDWELL COMMERCIAL AND INDUSTRIAL PREMISES
Economic Context
Commercial and industrial premises suitable to the needs of new and existing investors are vital to the successful presentation of the offer expressed in Sandwell Economic Prospectus.
The Borough’s focus on growing its identified priority sectors requires fit for purpose land and accommodation. If these are not in place, investment is likely to flow elsewhere.
Sandwell’s stock of commercial premises is characterised by a low proportion of retail premises compared with the Region and England, but a relatively high proportion of offices and factories (see figure 3.8). This may not be a disadvantage due to the West Midland Region’s current poor occupancy rate
62 for retail premises. A report by the Local Data Company (2010)85 does not include Sandwell specific intelligence but shows Wolverhampton to have the highest (and rising) retail vacancy rate in the Region, with Walsall second highest. Birmingham is ranked third but has seen the vacancy rate decline during the first six months of 2010.
Figure 3.8: Commercial and Industrial Floorspace Units (2005 revaluation) 2008 Commercial and industrial floorspace units (2005 revaluation), 2008
Percentage Sandwell West Midlands England 45
40
35
30
25
20 39.2 36.6 34.2 15 31.1 23.6 23.4 10 20.4 18.7 20.0 15.7 14.4 12.2 5 0.00.00.00.00.02.4 3.9 4.1 0 All Bulk Classes Retail Premises Offices Factories Warehouses Source: Valuation Office Agency Source: Valuation Office Agency
The rateable value of commercial and industrial floor space in Sandwell, based on 2008 data, shows Sandwell to be competitive with the Region and with England as a whole. The most expensive category is retail at £88 per square meter, but still competes favourably with the Region and England.
Based on 2008 data, office space is cheaper in Dudley, Wolverhampton and Walsall than in Sandwell, which may be as a result of its close proximity to Birmingham. Rental value is higher in Birmingham than Sandwell (see figure 3.9).
Figure 3.9: Commercial and Industrial Floorspace 2008 Commercial and Industrial Floor Space and Rateable Value Statistics (2005 Revaluation) 2008
£140
£120
£100 Sandw ell £80 West Midlands £60 England £40
£20 Rateable Value per sq m sq per Value Rateable £0 Retail Premises Offices Factories Warehouses
Source: ONS 2010, Neighbourhood Statistics, Commercial and Industrial Floor Space and Rateable Value Statistics.
63
Industrial premises in Sandwell, Dudley and Walsall each attract a higher rental value than the Black Country average, reflecting particularly subdued values in Wolverhampton. However, Birmingham again attracts a higher rateable and rental price (see table 3.17).
Table 3.17: Average Office and Industrial Floorspace Rental Prices Office Industrial (£/annum) (£/annum) Area: psft psm psft psm Dudley 8.86 95.35 4.39 47.30 Sandwell 11.40 122.71 4.28 46.03 Walsall 9.76 105.05 4.13 44.47 Wolverhampton 9.41 101.24 3.67 39.45 Black Country Average 9.86 106.09 4.12 44.31 Birmingham 12.51 134.69 5.24 56.40 West Midlands 10.24 110.22 4.81 51.75 Source: CoStar Focus database (prices of correct as of July 2010). These prices do not include rates and service charges. Quoted in BCC (September 2010)
Retail and office accommodation are competitively priced in Sandwell, particularly when compared to England as a whole (see figure 3.10). However, factory and warehouse accommodation has a smaller cost advantage, probably due to the agglomeration effects delivered to manufacturers by locating in the area. Other bulk premises cost more than in competitor locations.
Figure 3.10: Commercial and Industrial Floorspace Rateable Value 2008 Commercial and industrial floorspaces rateable value (2005 revaluation), 2008
£ per m2 Sandwell West Midlands England 140
120
100
80
130 128 60 121 112 95 88 90 40 84 66 70 58 61 49 52 20 40 41 35 31 36 33 32 24 26 29 00000000 0 All Bulk Classes Retail Premises Offices Commercial Offices Other' Offices Factories Warehouses Other Bulk Premises Source: Valuation Office Agency Source: Valuation Office Agency
Key Issues
Sandwell has a relatively low intensity of retail space but a high intensity of factory and office accommodation.
Sandwell maintains a competitive position against the region and England in terms of rateable value for commercial and industrial floor space. However, this cost advantage disappears against the other Black Country boroughs.
64 3.6. DEMAND FOR LABOUR
JOB DENSITY
Economic Context
Job density shows the ratio of total jobs to working age population. A low or declining ratio suggests a poorly performing economy and possibly a lack of success in terms of business growth e.g. inward investment, business retention or generic growth in terms of employment. However, a declining ratio can coexist with rising GDP or GVA per head as fewer workers increase their output in the absence of new businesses to take up the displaced labour force.
The labour market profile for Sandwell (2010)86 projects a fall in the number of jobs in Sandwell between 2006 and 2020. The Report predicts a shortage of jobs for all working age people with a ratio of 74 jobs per 100 working age people in 2020. This position may be exacerbated by the proposed increase in the state pension age resulting in fewer opportunities arising from replacement demand created as people retire. Figure 3.11 highlights that Sandwell’s job density ratio is currently below the national and regional level.
Figure 3.11: Job Density 2000/08
Job Density 2000 - 2008
0.86 0.84 0.82 0.8 Sandwell (density) 0.78 West Midlands (density) 0.76 Great Britain (density) 0.74 Job Density Ratio Density Job 0.72 0.7 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year
Source NOMIS Labour Demand 2/7/2010 Notes: The density figures represent the ratio of total jobs to working-age population. Total jobs includes employees, self-employed, government-supported trainees and HM Forces
Key Issues
Sandwell’s low level of job density and the implications this has for strategic options such as land use, housing, education and skills.
65 Lack of opportunities in Sandwell creating the need for local people to commute in order to find work.
THE DETERMINANTS OF LABOUR FORCE STRUCTURE
Economic Context
Labour represents a key variable for economic analysis. Labour productivity reflects capital investments and provides evidence as to the value being added by capital investment. A company in Sandwell using high tech machinery is likely to be more productive per person than a competitor company using old technology elsewhere. Other factors affecting labour productivity include training, social attitudes, work ethics and unionisation. Training used in conjunction with capital investment probably represents the most important combination in terms of raising output of a business. This is known as the capital/labour ratio. Technological progress raises the output of a given capital/labour ratio as it is applied during the production process.
Three key factors affect the size of the labour force, population, migration and the proportion of population participating in the work force. Shortages of labour can result in cost push inflation as companies react to employees taking advantage of their scarcity and corresponding rising value.
The issue of recruitment difficulties and worklessness coexisting are dominant themes regionally and have major implications for Sandwell. If worklessness is to be reduced and productivity plus output increased, Sandwell residents will need to access new opportunities as they become available through a growing and diversifying local economy (see Appendix Four).
At the same time Sandwell businesses will need to provide employment opportunities and quality premises that prove attractive to local people.
Discussions with the Skills Funding Agency have identified a number of key issues for Sandwell and the function of its labour market in terms of maximising productivity and output through upgraded skills include:
Capacity; an aging workforce without a corresponding inflow of qualified individuals to take up vacancies will reduce the potential output of the Borough and the corresponding contribution it makes to the national economy. A profile of Sandwell’s workforce by age group and hence projection for those in retirement and nearing retirement can be found in Section Four. Overall figures suggest that Sandwell is not likely to be disadvantaged by an aging society and numbers nearing retirement than elsewhere.
Replacement demand: The West Midland Regional Observatory (WMRO, - June 2010)87 estimate that regionally, some 860,000 job vacancies are expected to arise over the 2010-2015 period due to ‘replacement demand’ –
66 with net new jobs created by the region’s businesses accounting for only 2% of total employment demand. It is estimated that nearly 510,000 jobs (58% of all job vacancies) will be due to labour turnover and more than 350,000 (40%) will be due to the retirement of older workers (see Appendix Four). Section Four shows that Sandwell has a comparatively young resident profile putting the Borough in a strong position to help fill the gap caused by replacement demand (see table 3.18).
Table 3.18: Replacement Demand and Net New Jobs Expected Net New Jobs and Replacement Demand by Sector, 2010/15 Net New Jobs Replacement Demand Agriculture -11,000 24,000 Engineering -9,000 50,000 Manufacturing -6,000 59,000 Electricity, Gas and Water -3,000 4,000 Construction 8,000 37,000 Wholesale and Retail 18,500 128,000 Hotels and Catering 4,000 132,000 Transport 5,000 53,000 Lower Value Adding Business Services 14,000 124,000 ICT and Telecoms 7,000 17,000 Public Admin -6,000 30,000 Education -10,000 46,000 Health and Social Care -1,000 69,000 Recreational health and Sport 1,500 72,000 Source: WMRO analysis based on Cambridge Econometrics forecasts and Labour Force Survey data
Sandwell and Birmingham seem less likely to suffer from replacement demand problems than the other boroughs from now until 2028. This is due to a lower proportion of their resident population due to reach retirement age over this period (see table 3.19).
Table 3.19: Projected Proportions Aged 45-54 and 55-59/64 for 2008, 2018 & 2028 2008 2018 2028 Age 45- 55-59F- Age 45- 55-59F- Age 45- 55-59F- 54 64M 54 64M 54 64M England 13.2% 8.8% 13.7% 8.9% 11.4% 9.0% West Midlands Region 13.1% 9.0% 13.6% 9.0% 10.8% 9.1% Sandwell 12.5% 7.9% 13.7% 8.3% 11.3% 8.7% Dudley 13.3% 9.5% 14.3% 9.2% 11.1% 9.8% Walsall 12.8% 8.6% 13.4% 8.7% 10.6% 9.0% Wolverhampton 12.5% 8.1% 13.0% 8.4% 10.5% 8.6% BLACK COUNTRY 12.8% 8.6% 13.7% 8.7% 10.9% 9.0% Birmingham 11.3% 6.8% 11.4% 6.9% 10.0% 6.9% Source: Source: ONS 2008-based Sub National Population Projections – Table 2d Quinary Age Groups
Diversification: This is needed to ensure that a diverse range of opportunities are available and to encourage the growth of sectors and sub
67 sectors, allowing those with existing skills to transfer them within sectors and to growth products and services. Although many residents will in future, achieve higher level training and qualifications, e.g. level 3, many will remain below and a key for the Borough is to ensure employment opportunities for this group continue to exist.
Each of the three priority sectors identified within the Sandwell Economic prospectus include sub sectors which will provide employment for residents of the Borough and elsewhere, at all levels. This will require a focused and flexible approach to training and the acquisition of appropriate skills, many of which will be new or not widely available within the Borough.
The Sandwell Business Survey (Sandwell MBC, 2010g) asked local businesses about their recruitment experience. A total of 12% said they have experienced recruitment difficulties within the previous year. A significant proportion (43%) said the question did not apply as they have not attempted to recruit within the period. On the subject of ‘skills shortages’ a majority of respondents (78%) did not expect a problem in the future.
Sandwell employees are currently concentrated in three industrial sectors; ‘Services’; ‘Distribution, hotels and restaurants’, and ‘Manufacturing’. The key difference between the borough levels and the regional and national proportions is the higher percentage employed in ‘Manufacturing’ and the comparatively low proportions working in ‘Services’. This profile represents Sandwell’s significant manufacturing background. In recent years, national debates have been concerned with the extent manufacturing can still be relied on to grow the economy. However, new advanced manufacturing, particularly production opportunities tied in with the green agenda has injected new life into this sector and now is fully supported by the Government. Our sector analysis concluded that Sandwell has a competitive advantage in terms of potential to diversify manufacturing but needs to aim for higher value adding methods of production. This should be combined with growth in Sandwell’s financial and business services sector, regarded nationally and regionally as a key driver of employment and increased output.
The most recent data identifies that the proportion of residents working in ‘high’ level occupations in Sandwell is considerably well below the West Midlands and Great Britain levels by 9.5% and 13.3% respectively (see table 3.20). By contrast the proportion of Sandwell residents in ‘low’ level occupations is proportionally higher than the regional and national levels by 7.4% and 10.1% respectively. This highlights the skills gap in the borough. Moreover this most likely explains why Sandwell’s average residence pay is £27.00 per week below it workplace pay levels, [as managers and senior officials often live outside the borough].
68 Table 3.20: Employment by Occupation (October 2008 – September 2009) West Great Sandwell Sandwell Occupation Midlands Britain (numbers) (%) (%) (%) Soc 2000 major group 1-3 33,300 30.7 40.2 44 1 Managers and senior officials 12,100 11.1 14.3 15.7 2 Professional occupations 8,900 8.1 13 13.4 3 Associate professional & technical 12,300 11.2 12.7 14.8 Soc 2000 major group 4-5 24,400 22.4 22.5 21.8 4 Administrative & secretarial 13,000 12 11.3 11.2 5 Skilled trades occupations 11,300 10.4 11.1 10.4 Soc 2000 major group 6-7 20,300 18.7 16.4 16 6 Personal service occupations 11,700 10.7 9.2 8.5 7 Sales and customer service occs 8,600 7.9 7.1 7.5 Soc 2000 major group 8-9 30,700 28.3 20.9 18.2 8 Process plant & machine operatives 14,300 13.1 8.4 6.8 9 Elementary occupations 16,400 15.1 12.4 11.3 Source: ONS annual population survey - NOMIS Labour Supply 2/7/2010 Notes: Numbers and % are for those of 16+, % is a proportion of all persons in employment
Analysis by Cambridge Econometrics (2010)88 (see figure 3.12) demonstrates the expected change in the composition of demand for labour in Sandwell by 2020. Higher skilled occupations are expected to account for most employment in 2020 (rising from 39% in 2006 to 43% in 2020). The challenge for Sandwell is to fill the gap in demand for skilled labour from the local resident community rather than see skills imported from elsewhere as there is still expected to be more skilled jobs in the Borough than people to fill them by 2020.
Figure 3.12: Mapping Skills Supply against Labour Demand
Mapping skill supply against labour demand
Labour demand 60 Labour suppy
50
40
30 Thousands 20
10
0 2006 higher skilled 2006 unskilled 2020 higher skilled 2020 unskilled employment employment employment employment
Source: Cambridge Econometrics employment projections and Annual Population Survey – residence based Source: Cambridge Econometrics Employment Projects and APS; Residence based
69
A further challenge is that many of those who become unemployed are likely to lack the skills necessary to find alternative employment and are consequently less attractive to employers. This is illustrated in terms of the most recent occupations held by those currently unemployed and those occupations that they were seeking. Table 3.21 shows that as of July 2010, a greater proportion of Sandwell’s unemployed sought occupations that were elementary (33%), with 13% seeking employment within a process, plant or machine operative occupation. There are no large differences between usual occupation and sought occupation, signifying limited ambition within the labour market for progression to higher level occupations. Put simply, generating new employment opportunities, accessible to people of varied skill levels, and supporting retraining and upskilling should be a major area of policy focus.
Table 3.21: Claimant Count by Usual and Sought Occupation in Sandwell Occupation Usual % of total Sought % of total occupation occupation Managers and Senior Officials 305 2.5% 300 2.5% Professional Occupations 250 2.1% 245 2.0% Associate Professional and 505 4.2% 505 4.2% Technical Occupations Administrative and Secretarial 1,070 8.8% 1,080 8.9% Occupations Skilled Trades Occupations 1,320 10.9% 1,380 11.4% Personal Service Occupations 660 5.4% 620 5.1% Sales and Customer Service 2,375 19.6% 2,415 19.9% occupations Process, Plant and Machine 1,565 12.9% 1,585 13.1% Operatives Elementary Occupations 4,070 33.6% 4,000 33.0% Column Total 12,120 100.0% 12,130 100.0% Source: Claimant Count, ONS, July 2010 © Crown Copyright. All rights reserved
Figure 3.13 demonstrates an underlying source of concern about the dynamics of Sandwell’s economy. It shows that in April 2010 the borough had relatively high levels of job vacancies, compared with other parts of the region, but also relatively high unemployment. The implication is that the mismatch between skills needed and skills available is more marked in Sandwell than elsewhere. The implication is that the likelihood of employers shifting output to sites elsewhere (within the UK or overseas) or suffering a gradual erosion of market share (because they are operating with low skill levels) is higher than in other parts of the West Midlands.
70 Figure 3.13: Labour Market Performance in the West Midlands 2010 High Unemployment Low High Unemployment High Job Vacancies 8 Unemployment rate Job Vacancies
Wolverhampton Birmingham 7 Sandwell
6 West Midlands
0 5 105 15 20Job 25 vacancies 4 South Staffordshire 3
Low Unemployment Low 2 Low Unemployment High Job Vacancies Job Vacancies
Source: Oxford Economics & ONS Claimant Count, April 2010
Sandwell is in the bottom quartile overall in terms of employment in knowledge intensive sectors (see figure 3.14). The data demonstrates a high proportion of knowledge sector employment in the public sector and a low proportion in private knowledge intensive services. Considering the Borough’s high proportion of manufacturing, its lack of high and medium tech manufacturing is of particular concern. Sandwell’s lack of diverse and knowledge intensive businesses is likely to put the Borough at a disadvantage when it comes to sharing the results of future increasing manufacturing output.
71 Figure 3.14: Share of Employment in Knowledge Intensive Sectors by West Midland Authority
Source: ABI / WMRO September 2010
Tackling Sandwell’s Skills Deficit
The Sandwell Business Survey (Sandwell MBC, 2010g)89 asked local companies about skills related issues. The highest proportion of respondents (42.6%) said they will not be in a position to offer ‘structured, in-house training’ such as apprenticeships within the next two years. However, 34% said they will be offering such training, but 5.7% of respondents said they will not offer training due to a lack of interest.
A notable result of the Survey (Sandwell MBC, 2010g)90 is that 84% of respondents do not employ graduates. However, 35% of those intending to recruit in the next 12 months say they will be recruiting graduates.
Experience of Sandwell Council’s Economic Regeneration and Skills Division suggests that the most important intervention the public sector can make to enhance labour market functioning is to support employers to enable them to feel confident in recruiting. This should be achieved through working closely with businesses to fully understand their specific needs from employees. An example of a successful response to worklessness and employer engagement already being implemented in Sandwell through its Local Employment Partnership (LEP) has been highlighted in a City Region wide review of local authority response to worklessness undertaken by Audit Commission in 2009.91.
The main objective of the LEP approach has been to work with local employers to identify and recruit suitable candidates from the local community. Job specific training is then provided for each specific vacancy.
72 Between March 2008 and November 2010, circa 250 Sandwell residents entered employment through the programme.
At the time of writing, thinking continues as to the way the skills requirement of Sandwell and its Black Country partners in regeneration will be satisfied. This seems likely to involve the Local Authority assessing what the skill and needs of the Borough are, what the legally binding Learner Entitlement requires and what provision therefore Sandwell needs the Young People Learning Agency to commission. Sandwell has identified the transitional sectors it wishes to see taken forward in terms of economic regeneration and these are referred to in the Borough’s 14 to 19 Commissioning Plan. A Commissioning Plan for other age groups is being developed and expected to be produced by the Council’s Commissioning Team by December 2010.
It remains unclear as to how the emerging Black Country Local Enterprise Partnership will evaluate the needs of employers and ensure that these are met by education and training providers as current government guidelines stress that provision is to be demand led. Potentially this could cause a conflict between the aspirations of potential trainees and those of local businesses whose opportunities may not correspond with the employment aspirations of local people.
An overview of the priority growth sectors for the region is shown in figure table 3.26 and Sandwell intends to ensure that provision, not available in the Borough but appropriate to future opportunities is accessible to Sandwell residents.
Government policy favours apprenticeships: Sandwell has identified training to level three as critical and had adopted this as a Local Area Agreement measure. The rationale being that level three opens the door to higher level technical training and education. The LAA also includes targets at Level One to ensure those who are unlikely to attain more than this are not left out.
Key Issues
Aligning skills commissioning and Information Advice and Guidance (IAG) with economic need.
Closing Sandwell’s skills gap for the resident labour force.
Producing detailed and bespoke intelligence regarding specific employer needs in terms of training and other enterprise support.
The low proportion of knowledge intensive jobs reducing potential value added in terms of the Borough’s output and increased vulnerability to outsourcing abroad.
73 Ensuring that, despite a projected contraction in some sectors, high replacement demand for labour will occur regionally, e.g. for manufacturing and engineering skills requiring over 100,000 employees between 2010 and 2015.
SANDWELL’S EMPLOYMENT PROFILE BY SECTOR
Economic Context
The employment profile of a local economy is a key determinant of wealth creation and employment growth potential. Locations that are highly dependent upon a few sectors or are dominated by sectors with a low capacity to add value are less likely to provide wealth creation and employment opportunities for residents. For this reason, Sandwell and the other Black County boroughs have sectoral diversification as a key objective within the Black Country Core Strategy.
Sandwell’s current high intensity of manufacturing and distribution activity increases the Borough’s vulnerability to future changes in demand for goods and services. However, the Borough has recently been more successful than its adjoining neighbours in achieving an increase in private rather than public sector employment.
Manufacturing, distribution, hotels and restaurants plus public sector are the three dominant sectors of employment in Sandwell. This profile suggests the Borough is vulnerable to pressures exerted by changes in the level of demand for tradable, manufactured products and to cut backs in expenditure within the public sector. Meanwhile the distribution sector is vulnerable to changes in consumer demand for goods as shown in figure 3.15.
Figure 3.15: Proportion of Working Age Population in Employment by Sector, July 2008 to June 2009
Proportion of working age population in employment by sector, Jul 2008-Jun 2009 Percentage
30
25
20
15 24.9 22.0 10 19.0 5 7.5 7.4 9.2 0.0 3.0 6.4 0 Agriculture and Energy and water Manufacturing Construction Distribution, hotels Transport and Banking, finance Public admin. Other services fishing and restaurants communications and insurance education and health Source: Annual Population Survey (w orkplace based), through Nomis, ONS
Source: Annual Population Survey / ONS
Regional data shows the West Midlands region to be vulnerable to cuts in public sector employment with a comparative fall in private sector employment
74 between 1998 and 2005 (see figure 3.16). This compares with growth in all other regions of Great Britain.
Figure 3.16: Changes in Private Sector Employment 1998-2005
Source: AWM 2010
The Guardian (2010)92 has estimated the public sector as a proportion of the total workforce for 2008 (see table 3.22). The data suggests that by 2008, Sandwell had the lowest proportion of public sector employment in the Black Country.
Table 3.22: Change in Public Sector Workforce by Local Authority (2003 to 2008) 2003 2008 % % Public Public Private Public Total sector Private Public Total Sector Sandwell 97,700 24,800 122,500 20.2% 103,600 23,700 127,300 18.6% Dudley 91,600 22,000 113,600 19.4% 91,700 25,700 117,400 21.9% Walsall 83,800 18,500 102,300 18.1% 80,200 19,100 99,300 19.2% Wolverhampton 76,300 22,800 99,100 23.0% 77,600 26,300 103,900 25.3% Black Country 349,400 88,100 437,500 20.1% 353,100 94,800 447,900 21.2% Birmingham 362,500 114,400 476,900 24.0% 359,800 124,600 484,400 25.7% TOTAL 711,900 202,500 914,400 22.1% 712,900 219,400 932,300 23.5% Source: Guardian 201093
75 The WMRO94 has produced an analysis of future jobs growth across the region by local authority district. The data suggests that jobs growth will be weakest in the rural areas such as Wychavon and Herefordshire. In contrast the strongest jobs growth is likely to be in the smaller urban centres such as Warwick and Lichfield. Sandwell is positioned towards the lower end of the middle band which includes the larger urban areas such as Birmingham and Wolverhampton (see figure 3.17).
Figure 3.17: Projected Average Annual Growth in Numbers of Jobs from 2010 to 2030 by Local Authority
Source: WMRO (2010) State of the West Midlands Annual Synthesis Report (Policy Assessment Model, baseline forecast, page 35).
The WMRO model also assesses what may happen if policy changes occur such as the planned reduction in the size of the public sector. Under this scenario, six local authorities including Birmingham would have fewer jobs in 2030 than they currently have. Sandwell shows the smallest increase of the districts expected to see jobs growth, less than any of its Black Country neighbours. Fast growing boroughs such as Tamworth represent the group with limited public sector employment.
Research by PWC (2010)95 estimates that planned government cuts during the four year period after 2010 will result in the loss of 80,000 public sector jobs across the West Midland region. Out of all UK regions this puts the West Midland region at the top of the lower middle quartile at 3.6% of total jobs in the region. The highest loss of public sector employment is expected to be Northern Ireland (5.2%) and the joint lowest London and the South East (3.1%).
Modelling by WMRO suggests that despite imminent public sector job cuts, Sandwell is still expected to experience a small increase in its overall number
76 of jobs between 2010 and 2030 (see figure 3.18). However, the model suggests that the other Black Country boroughs will achieve a higher level of job growth.
Figure 3.18: Projected Average Annual Growth in Numbers of Jobs from 2010 to 2030 by Local Authority Taking into Account Public Sector Jobs
Source: WMRO (2010) State of the West Midlands Annual Synthesis Report (Policy Assessment Model, baseline forecast, page 37).
The AWM’s Resilience Index (2010)96, however, gives Sandwell’s percentage of employment in ‘public administration’ a low weighting in terms of its impact on the Borough.
Key Issues
Poor record in generation of private sector employment over time and over high reliance on the public sector for employment.
Sandwell projected to experience below regional average jobs growth up until 2030, below the figure for Birmingham and the other Black Country boroughs.
Sandwell’s economy remains heavily skewed towards manufacturing, health, social care, transport and storage.
Scientific, professional and technical occupations are poorly represented.
77 EMPLOYMENT STATUS IN SANDWELL
Economic Context
Changes in the level of self employment provide an indicator as to what is happening to business formation and survival below the VAT threshold and many unincorporated businesses are run by the self employed. Many growth companies start as self employment. These provide a valuable addition to the productive capacity of the local economy as well as serving to reduce welfare dependency. Self employment has a tendency to occur within sectors where the level of capital investment does not act as a barrier to entry. These include the service sector, construction and the production of niche products and services requiring high levels of experience, knowledge and skills rather than capital investment.
Figure 3.19 indicates that Sandwell performs poorly in term of self- employment. This has been the case over a long period of time because of the low level of entrepreneurialism (shown in table 3.10); determining the Borough’s comparatively low proportion of micro businesses (e.g. those with up to four employees as previously identified in figure 3.1). There may be several reasons for this, but a low level of skills and home ownership which can act as a source of collateral may well be influential. The Borough’s high level of overall deprivation can also act as a restraint on demand for goods and services.
Figure 3.19: Percentage of Working Age in Self-employment
Percentage of Working Age in Self-employment
UK West Midlands
Wolverhampton
Walsall Dudley
Sandwell
0% 2% 4% 6% 8% 10%
Source: APS / Secondary Source: Black Country Observatory
The profile of Sandwell’s current workforce identifies that there is 74.4% in full-time employment, which is around 5% above the regional and national levels, whereas for part-time work the opposite is the case (see table 3.23). The implication for this is difficult to assess: firstly, it could be argued that greater part-time work availability implies greater flexibility for employees and
78 employers, resulting in a labour market that is more adaptable. This adaptability often allows opportunities for parents to share the role of bringing up children at home and retaining employment; whereas employers are able to keep a lean flexible work force during economic downturns. As recent months have witnessed, the full impact of the recession is being held off by the reliance on part time work. Baker (2010)97 states, ‘the surge in part-time work has been attributed to attempts by employers to retain key talent by reducing hours rather than cutting jobs, and to more employers offering part- time rather than full-time jobs’.
Secondly, the flexibility that the part-time job option brings may be favouring the employer too much so as workers become reliant on this form of work as an only choice. Nigel Meager, from the Institute of Employment Studies, said: ‘We could be in this situation for several years yet, with significant numbers of people struggling to get into the labour market and taking [part-time jobs] that for them are not the optimal choice’98.
Table 3.23: Employee Jobs 2008 West Great Sandwell Sandwell Midlands Britain
(employee (%) (%) (%) jobs) Total employee jobs 127,300 - - - Full-time 94,700 74.4 69.4 68.8 Part-time 32,600 25.6 30.6 31.2 Source: ONS Annual Business Inquiry Employee Analysis - NOMIS on 23 June 2010 Notes: % is a proportion of total employee jobs. Employee jobs excludes self- employed, government-supported trainees and HM Forces
Another feature of Sandwell’s labour force is a comparatively low incidence of part time working. The trend towards part time working has been apparent regionally and nationally but Sandwell employees continued to be less likely to be working part time than is the case elsewhere (see table 3.24).
Table 3.24: Proportional Change Working Full-time and Part time 1995 and 2008 Sandwell West Midlands Great Britain 1995 Full Time 77.3% 72.8% 71.4% Part time 22.7% 27.2% 28.6% 2008 Full Time 74.4% 69.4% 68.8% Part Time 25.6% 30.6% 31.2% Source: ONS Annual Business Enquiry Employee Analysis / NOMIS
This position results from the sectoral profile of the Borough with its focus on manufacturing and a comparatively small service sector. The former may not be providing the type of employment opportunity that resident sub sectors, e.g. women find attractive, whilst the comparative lack of service sector opportunities discourages participation in the workforce.
79 Key Issues
A comparatively low level of self employment acting as a barrier to future growth output and the development of niche products.
A low proportion of part time opportunities that can reduce labour market flexibility for specific sub groups such as women residents with family commitments.
THIRD SECTOR / SOCIAL ENTERPRISE IN SANDWELL
Economic Context
The third sector can be defined as non governmental organisations that are driven by the achievement of value. Surpluses are principally reinvested to fund further social, environmental and cultural objectives.
The sector generates economic value in a number of ways: including provision of employment, acting as a component of the supply chain, supporting volunteering. The sector is key to the local development of enterprise, skills and support for those out of work.
Across the West Midlands Region as a whole, the third sector is large, estimated to comprise over 14,000 formal and active organisations, spending in excess of £3 billion every year and employing over 51,000 people (RAWM, 2009)99.
Sandwell engages with the sector in three ways:-
• Buying services from third sector organisations; • Giving support such as funding to the sector; and • Providing a strategic context within which the sector can plan and operate.
Despite much output not being paid for directly, the third sector makes a considerable contribution to the output of Sandwell, helping residents to build confidence, personal skills, and experience of entry into work. This activity helps increase the output and competitiveness of the local economy as well as contributing to improvement in social and psychological well being.
Sandwell’s Third Sector is extensive with 771 organisations included on the database of Sandwell Council for Voluntary organisations (SCVO). The SCVO estimate that there are 7,324 employees within the sector equating to 4,944 full-time equivalent posts earning an estimated £93.4m per annum. Using RAWM data and methodology, the SCVO estimate the sector’s contribution to the Borough’s GDP to be £394.6m per annum.
80 SCVO estimate that every £1 of public funding generates another 33p as well as being supported by many hours of time provided free of charge by volunteers.
Sandwell is keen to work with the third sector wherever an additional community benefit can be demonstrated and value added over and above that potentially added by any other organisation.
Key Issues
Tougher grant funding environment.
Public sector budget cuts and disruption blocking the contracting process.
Increasing demand for services.
Transition to new ways of working and funding such as the commissioning process which can in some cases work against smaller organisations.
Danger of exclusion from new forums, e.g. Local Enterprise Partnership and other emerging bodies / relationships.
PREPARATION FOR THE FUTURE
In early 2010 Sandwell’s partners in regeneration published an Economic Prospectus (Sandwell MBC, 2010)100 for the Borough. This provides an overview for the future direction of the local economy and identifies the sectors that are considered best placed to take the local economy forward.
As part of the development of the Prospectus, Sandwell’s Economic Partnership, The Chamber of Commerce, Council officers and elected members came together during 2009 with the Regional Development Agency and Boston Consulting group to identify which transformational sectors would best serve the Borough’s transition into a profile that would ensure jobs and wealth creation in future years (Sandwell MBC, 2010)101 and maximise the multiplier effect. This analysis resulted in the identification of three key sectors for priority development. These are:
• Diversified manufacturing, including high value added engineering, food production, offsite construction, and health products. • Business, financial and customer services. • Green industries including environmental technologies, waste recycling, resource management and research.
These sectors are judged to have potential to provide Sandwell’s economy with:
• Good prospects for growth. • Greater potential GVA per head and GDP for the Borough.
81 • Least vulnerability to recessionary pressures and the vagaries of the economic cycle. • Comparative and/or first mover advantage. • Gain from Sandwell’s central location. • Maximum future viability. • Potential to help diversify Sandwell’s economy. • Increase employment opportunities at all levels and within targeted resident sub groups. • A contribution to reducing Sandwell’s earnings gap with the wider UK.
Oxford Economics have looked at manufacturing in a little more detail. They predict the food and drink sector to grow in the medium term, at least as far as output is concerned, as are wood products, such as furniture, as well as the main engineering sectors and plastic and non-metallic mineral products. But output in textiles, paper and printing and electrical/ optical equipment sectors is forecast to decline over the period 2009-15, reflecting a continuation of past pressure on those sub-sectors within the borough, and increasingly competitive national and global markets (see table 3.25).
Table 3.25: GVA and Employment Forecasts within Manufacturing Sub-sectors in Sandwell (Annualised Percentage Change) GVA Employment Manufacturing sub-sector 2009-15 2016-22 2009-15 2016-22 Agriculture 3.2 3.0 1.2 0.3 Extraction -11.4 -11.3 -12.7 -10.9 Food, drinks & tobacco 3.3 2.2 0.8 -0.7 Textiles -5.9 -8.9 -7.6 -9.8 Wood products 4.7 1.0 -0.4 -0.5 Pulp, paper & printing -1.0 -2.1 -4.6 -5.1 Chemicals & man-made fibres 0.9 0.7 -4.7 -4.6 Rubber & plastic products 3.7 1.2 -0.4 -1.5 Other non-metallic mineral 6.4 2.3 -0.9 -1.6 products Metals 3.6 0.6 -3.5 -3.7 Machinery & equipment 4.6 1.8 -2.5 -2.8 Electrical optical equipment -1.0 -2.9 -6.4 -6.6 Source: Scott Wilson (2010)102
Sandwell’s emerging economy will need greater emphasis on higher value added, specialist products and increased flexibility in the face of changing customer preferences and technological capability.
Diversification of the markets that local companies supply is a key component of Sandwell’s approach to economic regeneration in order to increase resilience to economic shock. Its sectoral approach is based on the
82 proposition that a diversified economy is a stronger, more resilient economy and that it is better to retain and build on what already exists than start fresh. The result is expected to be increased investment, employment, and entry into major new market opportunities for the products and services produced by local factors of production.
Sandwell’s food sector is already well established and offers considerable opportunity for product development, transfer of skills from other sectors and supplying the regional market place.
Business services are also established to a degree but less so than in other locations. The regeneration of West Bromwich will provide considerable new opportunities for the development of this sector. Business services are also a key sector for development within the Black Country Study.
Sandwell has recently been identified by the Regional Development Agency as a location for green industries as the market for environmental services within the West Midlands is already significant and growing. The Borough has recently gone into a 25 year partnership with SERCO, a private waste disposal contractor to process waste. Other key markets identified as having potential for future development includes renewable energy, energy management and water treatment. A more detailed analysis of the potential of the green sector for Sandwell can be found in Appendix Five (A) and (B).
Since the sectoral analysis by Sandwell was undertaken, an overview of each local authority’s focus across the region has been compiled (see table 3.26).
83 Table 3.26: Local Authority Statements of Skills Priorities Sectors for the Future
Source: West Midlands Leader Board 2010
Key Issues
Ensuring the provision across the Region aligns with economic need as defined within each respective LEA and that duplication in provision is minimised.
SANDWELL’S LINKAGES WITH PARTNERS IN ECONOMIC REGENERATION
Economic Linkages within Sandwell
Sandwell is a leader in terms of helping maximise the benefits that local businesses receive from procurement opportunities within the local supply chain. The mechanism for this is FinditinSandwell, a web based procurement site which in August 2010 had 6,559 users, 2,946 from the Borough and 3,613 from outside. The Sandwell model has now been adopted elsewhere including Birmingham.
84
The Chamber of Commerce chairs the Business Sub group of the Sandwell Skills and Economic Regeneration Partnership. In addition, the Director of Sandwell Council’s ‘Urban Form’ Theme attends Chamber board meetings and visits local companies on a regular basis.
85 86 SECTION 4: PEOPLE AND COMMUNITIES
4.1. SOCIO-ECONOMIC HISTORY
Economic Context
Socioeconomic history identifies how a place and its people have changed and developed and how their input over time has contributed to the local economic landscape we see today.
Sandwell MBC was formed in 1974 by amalgamating the county boroughs of West Bromwich and Warley. The county boroughs had been formed in 1966 from six old boroughs: Warley County Borough: Oldbury, Rowley Regis and Smethwick; and West Bromwich County Borough: Tipton, Wednesbury and West Bromwich. The authority is divided into 24 wards.
The socioeconomic history of the borough, however, goes back far beyond the formation of Sandwell MBC.
ECONOMIC BACKGROUND
Underpinning the borough’s more recent history is it manufacturing base. Sandwell is part of the Black Country. This was originally a coalfield area but owing to ironstone found within the coal measures and plenty of limestone available became famous for its iron working (Barnsby, 1980)103. As a consequence Sandwell’s six towns played a major part in this economy (Industrial Development Association Ltd., 1955)104:
Oldbury grew rapidly when the value of coal was recognised and started out as a mining centre. It is an area rich in deposits of clay, shale, ironstone and other minerals, working of which became increasingly more important than coal. After the opening up of a canal system with Birmingham the town’s future was assured and by 1850 it produced railway rolling stock, manufactured bricks, possessed a glass industry and chemical works. By 1955 it was recognised for its steel tube manufacturing, phosphorus and other chemicals production, and pioneering work with plastics.
The Rowley Regis economy, initially driven by coal mining, became prominent in chain, cable and nail manufacturing; the latter until cheaper imports were introduced. The town was also famous for it staple industry: the Jew’s harp. By 1955 its manufacturing included nuts, bolts, shipping tackle, anchors, hydraulic lifts, bricks and pottery ware.
Smethwick (Soho) is the place where a factory, set up by James Watt and Matthew Boulton, started the application of steam power to industry revolution. Production of steam engines included marine engines used in early ships, for example the Great Eastern. Other manufactured goods in the Smethwick area included lighthouse glass, light buoys, lights for ships, glass
87 for railway signalling, specialised glass, and the ‘crystal’ and ironwork for Crystal Palace.
Tipton’s economy was driven by the manufacturing of iron castings for vehicle parts through to precision engineering components. It also included production of machine tools, brickwork, grates and glazed tiles for fireplaces.
Wednesbury has an engineering and metallurgy background, which include manufacturing bridges and the framework for large buildings, nuts, bolts, washers and studs for these structures. Other production includes steel tubes, boiler plates, axles, springs, machinery, plugs, taps and ship fittings.
West Bromwich’s economy was underpinned by heavy industry and corollary industries. It was renowned for its manufacture of springs and copper refining; producing steel and copper range boilers.
SOCIAL HISTORY OVERVIEW
Much of the original population of the Black Country in 1861 were from the local county area with an Irish minority. Migration into the Black Country was made up of families rather than individuals. This immigration was not casual as migrants intended to stay in the area (Barnsby, 1980).
This period was marked by a single waged economy with very few educated or classified as middle class, with no development, as such, of a white collared or technical class. However, by 1901 the service sector increased its importance with retail and wholesale accounting for 2.5%-6% of employment. Other sectors of importance included transport (10% of employment), and the building industry (8%) (Barnsby, 1980).
The population profile and employment structure of Sandwell showed little change until the 1950s. However during this period, with a booming manufacturing sector and shortage of male workers owing to the Second World War, the UK government turned towards the Commonwealth for labour to counter the regions underemployment. The first groups to come to Sandwell during this period were the Black Afro-Caribbean and the Sikhs. Initially young men looking for work for a year or two, the continued demand for workers throughout the 1950s and 60s led to many residing in Sandwell with the families from these groups joining them. The strong family network inherent in these groups, particularly the Sikhs, led to growing vibrant communities. The Guru Nanak Sikh Temple in Smethwick was the largest Sikh Temple outside India at the time of its opening (Sandwell MBC, 2010d)105
Further ethnic minority communities moved to Sandwell adding to its diversity. In 1979, Asian business owners expelled from Uganda by Idi Amins’ regime moved to the UK with some settling here in Sandwell. In the 1980s the communities from Pakistan and Bangladesh (formerly East Pakistan) settled in the UK. However, owing to changes in the economy, namely the decline in manufacturing during the late 80s, the Pakistani and Bangladeshi groups, at
88 that time struggled to establish themselves, a problem made worse by the language barriers they faced.
This structural change had wider affect on both Sandwell’s community and economy. The following sections identify the current situation.
4.2. DEMOGRAPHY
Economic Context
Demography and geography affect local service planning the needs of local businesses and spatial development of the borough.
CURRENT POPULATION
The population of Sandwell MBC at mid 2008 was estimated to be 289,100: 5.3% of the West Midlands region (ONS, 2010)106. This ranked, by population density, 46 out of the 354 local authorities in England, indicating that Sandwell is predominantly urban (Demographia, 2010)107.
The breakdown of Sandwell’s population at mid-2008 identified that the proportion of male and female residence are 48.8% and 51.2% respectively. The male proportion is 0.4% below the West Midlands figure and 0.3% below that of Great Britain (ONS, 2010)108.
The broad estimated ethnic make up of the population at 2007 can be seen in the table 4.1. This highlights that the Sandwell BME population is somewhat higher than both the regional and national average with the Asian community making up most of this difference.
Table 4.1: Resident Population Estimates by Broad Ethnic Group, All Persons, 2007 Ethnic Group Sandwell West Midlands England White 77.0% 86.1% 88.2% Mixed 2.5% 1.8% 1.7% Asian or Asian British 15.2% 8.4% 5.7% Black or Black British 4.3% 2.5% 2.8% Chinese or Other Ethnic Group 0.9% 1.2% 1.5% All Ethnic Groups 100.0% 100.0% 100.0% Source: ONS – NOMIS Neighbourhood Statistics
Migration
The most current ONS data does not specify the proportion of Accession Eight (A8) numbers who live in the borough. However, it has been the recent expansion of the European Union to include the Central and East European Countries that has seen the greatest changes to the UK’s population since 2004.
89 A report by Anne Green (2007)109, assessing the impact of migrant workers into the West Midlands (covering the period 2001-07) identified that during the financial year 2006/07 38.8% of new national insurance numbers (NINos) registered in the West Midlands were from Poland. In Sandwell, 41.4% were from Poland and 5.3% from Slovakia.
Additionally, the report identified that across the West Midlands the more traditional forms of migration from the old and current Commonwealth countries remains influential. For example, migration from India and Pakistan made up 14.9% of the regions new NINOs. In Sandwell, migration from India accounted for 15.7% during the 2006/7 - the next highest group after Poland.
Green’s report concluded that although the recent speed of migration has placed some stress on social services, which has effected the poorest in the region, the migrants are overwhelmingly young, employed and are making an important contribution to the West Midlands economy. Significantly, the report suggests there is no evidence that migration has dampened down wages or increased unemployment. Indeed, ethnic diversity offers inward investment opportunities with the potential to reach out to foreign markets and producers.
Population Age Profile
Table 4.2 shows the borough’s population age profile. It divides the population into 3 broad groups: pre working age, working age and retirement age. Sandwell’s 0-15 age group is proportionally higher than both that of the Region and England, whilst the number classified as in retirement age is lower. This comparative younger population profile is typical of the West Midlands urban areas (WMRO, 2010a)110
Table 4.2: Population Profile by Broad Age Groups June 2008 Broad Age Sandwell West Midlands England band 2008 Count % Count % Count % 0-15 60,100 20.8%1,051,300 19.4% 9,669,500 18.8% 16-59 female 84,800 29.3% 1,561,900 28.9% 15,186,500 29.5% 16-64 male 90,800 31.4% 1,731,800 32.0% 16,751,000 32.6% 60+ female 33,600 11.6% 671,100 12.4% 6,221,900 12.1% 65+ male 19,700 6.8% 394,900 7.3% 3,617,300 7.0% Total 289,000 100.0% 5,411,000 100.0% 51,446,200 100.0% Source: ONS – NOMIS Resident Population Estimates by Broad Age Band
POPULATION GROWTH
The projected population growth for Sandwell by 2033 is 13.4%, increasing to 327,300. This is a slightly higher projected growth than the West Midlands region at 13.0% but significantly lower than that estimated for England at 18.0% (ONS, 2008)111.
A key strategy and policy issue for western economies is that of an ageing society, particularly its likely impact on resources. Sandwell is expected to experience a growth in proportion of this cohort, however by comparison to
90 the region and England this growth is projected to be less significant as the table 4.3 identifies.
Table 4.3: Projected Proportions of Males 65+ and Females 60+ 2008 and 2033 Male Female Total Male Female Total Area 2008 2008 2008 2033 2033 2033 Sandwell 6.8% 11.6% 18.4% 8.6% 13.0% 21.6% West Midlands 7.3% 12.4% 19.7% 10.7% 15.4% 26.1% England 7.0% 12.1% 19.1% 10.4% 15.1% 25.5% Source: ONS 2008-based Sub National Population Projections – Table 2d Quinary Age Groups
Key Issues
• Sandwell’s relatively low ratio of businesses to resident population.
• Need for a mechanism to support Sandwell ethnic minority sub groups who are prone to deprivation.
• Potential for strong links with the old and new commonwealth countries to offer new business opportunities for the Borough.
• Need to promote opportunities for the NEET group.
• Need for services to adjust to the new demands so that poorest in the Borough are not made to feel neglected. This is essential to reduce unnecessary social tensions, for example, where possible, economic gains from migration should be used to provide these services.
4.3. LABOUR MARKET SUPPLY
Economic Context
The local labour force is a key factor of production providing the human resources on which the borough’s businesses and productivity depend. A properly trained and skilled resident workforce is particularly important if Sandwell is to achieve its priority of ‘educated and skilled people into employment’.
ECONOMIC ACTIVITY5
The proportion economically active residents in Sandwell at 73% is low (see table 4.4), 4.7% lower than the West Midlands average and 5.9% below the level for Great Britain. The proportion in employment for Sandwell residents is
5 Economic activity is defined as those of working age either working or unemployed but actively seeking work.
91 nearly 10% lower than the regional level and 12% below Great Britain. Moreover, as the table shows the proportion of employees and self employed Sandwell residents is also below the regional and national average. As a consequence, these deficits lead to a higher proportion unemployed in Sandwell, which is 5.1% and 7% above the regional and national level respectively.
Table 4.4 shows that in Sandwell, females overall are slightly more effected proportionally than males. However, unemployment and the proportionally low levels of economic activity are significant issues for both males and females. The overall low levels of economic activity in Sandwell represents a major concern for the borough as it limits output and potential to grow.
Table 4.4: Employment Activity Oct 2008 – Sep 2009 West Great Sandwell Sandwell Midlands Britain (numbers) (%) (%) (%) All people Economically active† 130,300 73 77.7 78.9 In employment† 109,000 60.9 70.2 72.9 Employees† 98,200 54.7 61.8 63.4 Self employed† 9,900 5.7 8 9.1 Unemployed (model-based)§ 18,400 14.4 9.3 7.4 Males Economically active† 71,600 78.6 82.5 83.2 In employment† 58,800 64.4 73.3 76.3 Employees† 50,000 54.7 61.2 63.1 Self employed† 8,000 8.9 11.6 12.7 Unemployed§ 12,800 17.9 11 8.2 Females Economically active† 58,700 67.1 72.4 74.2 In employment† 50,300 57.2 66.8 69.2 Employees† 48,100 54.6 62.5 63.6 Self employed† 1,900 2.2 4.1 5.2 Unemployed§ 8,400 14.3 7.3 6.4 Source: ONS Annual Population Survey - NOMIS Labour Supply 2/7/2010 † Numbers are for those aged 16 and over, % are for those of working age (16- 59/64) § Numbers and % are for those aged 16 and over. % is a proportion of economically active
HOUSEHOLD INCOME
Economic Context
A key determinant of the level of wealth in circulation in the local economy. This is also a proxy for the level of value added economically by resident labour.
Table 4.5 identifies the earning of Sandwell residents. For all full-time workers Sandwell residents earn £45.10 per week less than the regional average and
92 £78.70 less than the national average. These lower wage levels, however, offer Sandwell labour cost competitive advantage.
Table 4.5: Earnings by Residence 2009 Sandwell West Midlands Great Britain
(pounds) (pounds) (pounds) Gross weekly pay Full-time workers 412.3 457.4 491 Male full-time workers 450.7 492.4 534.4 Female full-time workers 368.8 394.2 426.6 Hourly pay Full-time workers 10.48 11.56 12.47 Male full-time workers 11.07 12.21 13.16 Female full-time workers 9.96 10.5 11.45 Source: ONS annual survey of hours and earnings - resident analysis Note: Median earnings in pounds for employees working in the area.
Gross Domestic Household Income per head and Household Income are measures that reflect the productivity of local businesses and investment in both physical and human capital. Table 4.6 indicates that Sandwell has seen household income reduce between 2000 and 2008 compared to the UK baseline at a greater rate than the region as a whole. By 2008 Sandwell’s household income was £11,780 compared to £14,889 for the UK.
Table 4.6: Gross Domestic Household Income per Head Indices 2000 2008 UK 100.00 100.0 England 102.1 101.5 West Midlands 91.2 89.7 Sandwell and Dudley 83.4 79.2 Source: ONS-Regional Household Income (1995-2008)
WORKLESSNESS
Worklessness is a less familiar term than unemployment. It refers to all those who are out of work but would consider employment if they had the right opportunity, incentive or path back into unemployment.
In common with the wider UK, Sandwell’s unemployment decreased prior to the recession, but since has increased significantly as shown in figure 4.1. Although worklessness increased everywhere in the UK, the rate in Sandwell was more marked than regionally or nationally.
93 Figure 4.1: Unemployment Rate (%) 2006-2022
8.0 7.0 6.0 5.0 Sandwell 4.0 WM 3.0 UK 2.0 1.0 0.0
8 008 10 014 16 1 22 2006 2 20 2012 2 20 20 2020 20
Source: Oxford Economics, 2010 in Scott Wilson (2010)112
This behaviour reflects that experienced by the Borough during the previous recession in the early 1990s and the long period of economic expansion that followed as shown in figure 4.2.
Figure 4.2: JSA Claimants Rates January 1992 – February 2010 Sandwell and England
JSA Claimant Rate Sandwell and England Jan 1992- Feb 2010
14.0 12.0 10.0 8.0 6.0 4.0 2.0
% of working age age 16-59/64 working % of 0.0 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
Sandwell Rate England Rate
Source: ONS – NOMIS
Table 4.7 shows the numbers and proportion of those who are economically inactive in Sandwell, the West Midlands region and Great Britain. Additionally, it identifies those who are wanting or not wanting a job. With 27% of all people economically inactive in Sandwell, the borough performs below that of the
94 West Midlands (22.3%) and Great Britain (21.1%). Moreover, it identifies that the gap in proportion wanting a job, although higher than the West Midlands region and Great Britain, is significantly lower than the figures who do not want a job. These proportions are notably higher for females than males. This is most likely connected to traditional family values in which women, more often than men, stay at home to look after young children. Owing to Sandwell’s higher proportion of BME population this trend is more prominent as in these group women are more likely to stay at home (WMRO, 2010b)113. Thus this is not typical of the more flexible employment structures in areas where the service sector employment is high and where traditional gender roles are less entrenched.
Table 4.7: Economic Inactivity Oct 2008-Sep 2009 Great Sandwell Sandwell West Midlands Britain (numbers) (%) (%) (%) All people Economically inactive 47,100 27 22.3 21.1 Wanting a job 11,100 6.4 4.9 5.6 Not wanting a job 36,000 20.6 17.4 15.5 Males Economically inactive 19,400 21.4 17.5 16.8 Wanting a job 5,300 5.8 3.9 4.6 Not wanting a job 14,100 15.6 13.7 12.2 Females Economically inactive 27,800 32.9 27.6 25.8 Wanting a job 5,800 6.9 6.1 6.6 Not wanting a job 22,000 26 21.4 19.2 Source: ONS annual population survey - NOMIS Labour Supply 2/7/2010 Notes: Numbers and % are for those of working age, % is a proportion of resident working age population of area and gender
A recent report by the WMRO (2010b) 114 on worklessness identified the various demographic characteristics that are linked to higher than average levels of worklessness. The risk factors identified were:
• Female • Black ethnicity • Pakistani / Bangladeshi ethnicity • Indian ethnicity • Young person (aged 16-24) • Older person (aged 55+ to retirement age) • Having no qualifications • Long-term health problem of disability • Lone parent
The study identified that a combination of these risk factors acted as a multiplier resulting in a total that exceeds the value of single risk factors added together. Moreover, the individual risk factors were proportionally higher in the
95 West Midland metropolitan area, of which Sandwell is a part, compared to the rest of England
Sandwell’s demographic profile (see table 4.8) indicates that the borough has a higher proportion of Indian, Black, and Pakistani / Bangladeshi ethnic minority residents than the region and England. However, regarding the age and gender ‘risk factors’, the profiles suggest these are not specific issues to Sandwell. The following sections assess Sandwell’s position with regard to the other risk factors analysed in the aforementioned research, along with other known indicators of poverty: skills and qualifications; health; child poverty; NEET etc.
Table 4.8: Sandwell’s Risk Factor Profile (Age, Gender and Ethnicity) AGE GENDER ETHNICITY Female Male 18 - 24 Pakistani / 55-59 55-64 Male Female Black Indian years Bangladeshi years years Sandwell 9.3% 2.6% 5.1% 48.8% 51.2% 8.6% 4.9% 9.5% West Midlands 9.6% 3.0% 5.9% 49.2% 50.8% 5.0% 4.1% 3.7% Region England 9.5% 2.9% 5.8% 49.2% 50.8% 5.6% 2.5% 2.6% Source: adapted from ONS - NOMIS
Table 4.9 identifies the working age client group - key benefit claimants in Sandwell. Again it is clear to see that Sandwell has a higher proportion of total claimants and those claiming the key out-of-work benefits than the region and Great Britain, with a particularly higher proportion claiming ESA and incapacity benefits. Significantly, the proportion of total claimants on lone parent benefits is higher for Sandwell than the region and Great Britain.
Being a lone parent is highlighted as a barrier to employment (see below). Consequently, new rules introduced last year have tried to address this issue. The government has provided extra support for lone parents to help them prepare for work. However, this is a ‘carrot and stick’ approach as the support offered will be accompanied by rule changes that make it harder for lone parents to claim benefits. For example, lone parents with children aged 12 years and over will no longer be able to make a new or repeat claim for Income Support solely on the basis of being a lone parent. This will apply to lone parents whose children are seven and over from October 2010. These new stricter rules will need to consider the cost of child care and accompanied by real job creation if any impact on the reducing the worklessness figures are to be achieved.
Overall the data on worklessness support the concerns forwarded by the Employment, Learning and Skills Panels (ELSPs), who have identified a culture of benefit dependency in the borough’s priority wards. Proportions at ward level for working age benefit claimants are only available for total number of claimants. This identified a range from 13.5% in Abbey to 30.1% in Princes End.
96
Table 4.9: Working-Age Client Group - Key Benefit Claimants November 2009 West Great Sandwell Sandwell Midlands Britain (numbers) (%) (%) (%) Total claimants 42,660 24.3 17.9 15.8 Job seekers 13,330 7.6 5.2 4 ESA and incapacity benefits 16,310 9.3 7.2 7.1 Lone parents 5,340 3 2.1 1.9 Carers 3,310 1.9 1.4 1.1 Others on income related benefits 1,430 0.8 0.6 0.5 Disabled 2,420 1.4 1.1 1 Bereaved 500 0.3 0.2 0.2 Key out-of-work benefits† 36,420 20.7 15.2 13.4 Source: DWP benefit claimants - working age client group Note: % is a proportion of resident working age population of area † Key out-of-work benefits consists of the groups: job seekers, incapacity benefits, lone parents and others on income related benefits
The current proportion of Jobseekers Allowance (JSA) claimants (July 2010) for Sandwell is 6.6%, whereas for the West Midlands region and Great Britain the figures are 4.5% and 3.6% respectively115. Higher proportions claiming JSA were typical of urban areas in the West Midlands but between neighbourhoods, which are diverse with their varied histories and current characteristics, greater differences were identified (WMRO, 2010a)116. For example, Sandwell’s wards rates range from 4.1% in Old Warley to 11.4% in Soho and Victoria. The local diversity in Sandwell led to allocating 13 wards priority status (see sub-section: Sandwell’s Ward Based Response to Economic Exclusion and Deprivation).
Table 4.10 highlights the broad age group and duration of JSA claimants in Sandwell. The borough has a higher proportion of JSA claimants than the region and Great Britain aged 18-24; a higher proportion than the region aged 25-49, and is lower than the region and Great Britain for the 50+ age group. This reflects the younger composition of Sandwell’s population profile as described previously as well as identifying the issue Sandwell has with high levels of youth employment. Significantly, this is a major concern for the borough as unemployment amongst this age group is not only a waste of an asset but identifies deeper structural weaknesses in Sandwell’s labour market.
With regard to duration, the proportion claiming JSA short–term (up to 6 months) is lower than the West Midlands region and Great Britain, whereas mid-term claimants (6 month to 1 year) are higher than both the regional and national levels. The proportion claiming long-term is higher than Great Britain but lower than the region. This could be the consequence of a number of issues: for example, high levels of mid term JSA claimants may indicate lack of job sustainability, whereas high levels of long term unemployment could indicate low levels of employability or simply lack of job opportunities per se.
97 Data at ward level shows considerable variations across the borough: The aged 18-24 group ranges from 25% in Oldbury to 36.1% in Bristnall; the aged 25-49 group from 48.1% in Old Warley to 60.9% in Soho and Victoria; and the 50+ age group from 9.6% in Soho and Victoria to 22.2% in Old Warley.
For duration, the following variations were found: Up to 6 months from 51.7% in Tividale to 62.9% in Great Barr; 6 to 12 months from 17.1% in Great Barr to 27.5% in Old Warley; and for over 1 year 16.7% in Newton to 27.4% in Wednesbury North.
This diversity level, according to age and duration, indicates that ward level approaches where feasible are the best way to tackle unemployment, particularly areas of high deprivation. The Neighbourhood Employment Skills Plans were introduced for this purpose (see sub-section: Sandwell’s Ward Based Response to Economic Exclusion and Deprivation).
Table 4.10: JSA Claimants by Age and Duration May 2010 West Great Sandwell Sandwell Midlands Britain (numbers) (%) (%) (%) By age of claimant Aged 18-24 3,690 29.1 28.9 27.7 Aged 25-49 7,105 56.1 55.8 56.3 Aged 50 and over 1,860 14.7 15.1 15.5 By duration of claim Up to 6 months 6,725 53.1 55.3 60.6 Over 6 up to 12 months 3,230 25.5 22.9 21.9 Over 12 months 2,710 21.4 21.8 17.5 Source: ONS claimant count - age and duration - NOMIS Working-Age Benefits 2/7/2010 Note: % is a proportion of all JSA claimants
JSA claimants, as a condition for receiving benefit, are expected to actively check the positions available at their local Jobcentres. Table 4.11 identifies that there are more JSA claimants per unfilled vacancy in Sandwell than for both the region and Great Britain. Based on this data it appears that job opportunities are lower in Sandwell and that job creation as well as targeting individual employability also needs addressing. It can also be argued that not all jobs are advertised in Jobcentres and, particularly in Sandwell, many jobs are gained through informal routes, for example, word of mouth.
Table 4.11: Jobcentre Plus Vacancies May 2010 West Great Sandwell Midlands Britain Unfilled jobcentre vacancies (numbers) 1,592 32,112 280,398 Unfilled jobcentre vacancies (numbers) per 10,000 working age population 91 97 76 JSA claimants per unfilled jobcentre vacancy 8 5.1 5.2 Source: Jobcentre Plus vacancies - summary analysis - NOMIS Labour Demand 2/7/2010
98 Key Issues
• Low levels of economic activity equate to loss of output.
• High incidences of full-time employment correspond with lack of part- time opportunities
• A need to diversify the economy to produce a wider range of opportunities.
• Sandwell’s low level of self-containment.
• The dominance of low value added employment in the Borough.
• Comparatively low level of residency earnings.
• The wide variation of JSA claimants between wards.
• A higher proportion of young JSA claimants and a comparatively low level aged 50+.
• The low proportion claiming JSA up to 6 months contrasting with high rates for 6 month to 1 year, and 1 year plus.
• The high ratio of JSA claimants per unfilled vacancy in Sandwell.
• The Borough’s quarter of all people classified as economically inactive, below the proportion for the West Midlands and Great Britain.
• A high proportion of benefit dependency, therefore a greater risk that people fall into the welfare trap
• The high proportion of lone parents claiming benefits in the Borough.
4.4. SKILLS AND QUALIFICATION PROFILE
Economic Context
Skills and qualifications for all age groups in Sandwell are essential for the success of the borough. The business sector and local partners require a skilled and qualified workforce if they are to adapt to current and future economic demands generated by the global economy.
99 RESIDENT ATTAINMENT PROFILE
Sandwell residents’ qualification and skills profile differs from that of the region and England. In 2008, only 15% of Sandwell residents aged 19-59/64, were qualified to at least level 4 compared to 20.4% in the Black Country, 26.2% in the West Midlands and 30.5% in England (see figure 4.3). The chart below also highlights how this gap has widened between 2001 and 2008.
Figure 4.3: 19-59/64 Qualified to at Least Level 4
19-59/64 Qualified to at least Level 4
35% 30% 25% Sandwell 20% The Black Country 15% West Midlands England 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007 2008
Source: LFS/APS supplementary table 3: Qualification levels of the 19-59/64 Population (2001-2008)
In 2008, 30.3% of Sandwell residents aged 19-59/64, were qualified to at least level 3 compared to 37.6% in the Black Country, 45.2% in the West Midlands and 49.5% in England (see figure 4.4). This gap has widened between 2001 and 2008.
100 Figure 4.4: 19-59/64 Qualified to at Least Level 3
19-59/64 Qualified to at least Level 3
60%
50%
40% Sandwell The Black Country 30% West Midlands 20% England
10%
0% 2001 2002 2003 2004 2005 2006 2007 2008
Source: LFS/APS supplementary table 3: Qualification levels of the 19-59/64 Population (2001-2008)
Qualifications at least to level 2, (see figure 4.5) shows a similar picture. Sandwell is positioned at 4.8% below the Black Country position, 10.8% below the West Midland region and 14.4% below England’s figure.
Figure 4.5: 19-59/64 Qualified to at Least Level 2
19-59/64 Qualified to at least Level 2
80% 70% 60% Sandwell 50% The Black Country 40% West Midlands 30% England 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008
Source: LFS/APS supplementary table 3: Qualification levels of the 19-59/64 Population (2001-2008)
Figure 4.6 highlights the contrast between the proportion in Sandwell without a qualification compared to the region and the national level. It indicates that although Sandwell has only a slightly higher than the Black Country level, its
101 proportion without a qualification is significantly higher than that of the West Midlands and England. Although the gap between Sandwell and England has decreased by 2% between 2001 and 2008, it still stands at 9.1% with Sandwell at 21%; Black Country 20.1%; West Midlands 15.6% and England 11.9%.
Figure 4.6: 19-59/64 without a Qualification
19-59/64 without a Qualification
30%
25%
20% Sandwell The Black Country 15% West Midlands 10% England
5%
0% 2001 2002 2003 2004 2005 2006 2007 2008
Source: LFS/APS supplementary table 3: Qualification levels of the 19-59/64 Population (2001-2008)
The qualification levels achieved by Sandwell’s 19-59/64 age group are not the only ones of importance. Further data highlights the achievements of the Borough’s 14-19 age group. In January 2009, 93% of residents aged 16, and 82% of residents aged 17 participated in some form of education or training. Both rates are above average for the West Midlands Region (Sandwell MBC, 2010c)117.
Table 4.12 shows ‘Sandwell’s attainment level across all major indicators between 2006 and 2009. Key findings include that:
The success rates for Sandwell residents completing an FE course in 2008/9 at Long Level62 were 78.3%, an increase from 74.7% in 2007/8 and at Long Level 3 were 80.5%, an increase from 79% in 2007/8. Similar data is not available from learners in school sixth forms.
In 2008/9, 67% of residents aged 19 were qualified to level 2, while 37% were qualified to level 3. While these figures are still below the national average (76% at level 2 and 49% at level 3 in 2008/9) they represent an overall improvement of 13% at level 2 and 9% at level 3 respectively, from the 2003/4 levels.
6 Courses that are usually full-time and longer than 3 weeks
102 Apprenticeship success rates for 2009/10 for Sandwell residents are expected to be 74% an increase from 70.4% in 2008/9; with advanced apprenticeship success at 69.9%.
Sandwell continues to use the measures of level 2 and level 3 at age 19 to assess the attainment of its residents. In some instances, the Borough’s performance now exceeds national averages, in others the gap has yet to be closed. Therefore, while the Borough has comparatively low qualification levels across the whole 19-59/64 cohort, the level of 16-19 attainment is on a rising trend and should not be far off national levels in 2-3 years (Sandwell MBC, 2010c)118.
Table 4.12: Sandwell Attainment Levels 2006/09 Sandwell Providers 2006/07 2007/08 2008/09 National Average 08/09 GCSE 5xA-C 54.8 56.3 66.3 69.8 GCSE 5xA-C inc E/M 30.2 31.5 37.5 50.9 GCSE 5xA-G 85.5 87.0 90.7 92.3 Sandwell Residents 2006/07 2007/08 2008/09 National Average 08/09 FE Level 2 long 71.5% 74.7% 78.3% 78.2% FE Level 3 long 75% 79% 80.5% 81.3% FE Full Level 2 67.8% 70.3% 72.8% 75.6% FE Full Level 3 62.8% 68.6% 74.5% 72.4% Apprenticeship 63.6% 66.8% 70.4% 68.4% frameworks Advanced Apprenticeship 57.7% 70.7% 69.9% 73.6% frameworks Level 2 at 19 59% 63% 67% 76% Level 3 at 19 31% 35% 37% 49% Source: Sandwell 16-19 Commissioning Statement 2010-11 (Sandwell MBC, 2010c)
Moreover, Sandwell’s school attainment levels are improving. In total 11% fewer children leave school with 5 GCSE Grade A*to C (including English and Maths) than the West Midlands region. This gap widens to 13.4% when compared to the national level. However, this represents an improvement from the 2004/05 levels which were 13.1% and 15.3% respectively (see figure 4.7).
103 Figure 4.7: Proportion of Pupils achieving 5+ GCSE A*-C Grades, including English and Maths 2007-08
Proportion of Pupils achieving 5+ GCSE A*-C (inc Maths & English)
60%
50%
40% Sandwell 30% West Midlands England 20%
10%
0% 2004/05 2005/06 2006/07 2007/08 2008/09
Source: DCFS 2010
Significantly, an improvement can also be seen in ‘A’ level attainment. Although the average points scored in Sandwell are lower than the Black Country and England figures, figure 4.8 shows that between 2006 and 2008 the gap has narrowed: with the Black Country from 70.3 to 37.1 points and England from 179 to 121 points.
Figure 4.8: Average Points Scored at ‘A’ Level per Student
Average Points Scored at A Level per Student
800 750 700 650 Sandwell 600 Black Country 550 England 500 450 400 2006 2007 2008 2009 Year
Source: Black Country Observatory
The data above indicates that qualification attainment is comparatively low but the gap for Sandwell is closing. Importantly, it is necessary to make sure the improvement gained in the Borough’s ‘A’ level standards do not simply lead to an exodus of qualified young people from Sandwell. This will require the borough to increase employment in high GVA sectors (the vision of
104 Sandwell’s Economic Prospectus), thus attracting or retaining graduates in the borough, coupled with other employment and skills policies, and supporting activities. A list of activities Sandwell Council and its partners are supporting in order to reduce the skills gap can be found in Appendix Five (A) and (B).
Key Issues
• Comparatively low attainments levels in education and training.
• The problem of graduate retention.
• Sandwell’s high success rate for apprenticeship programmes.
• Ensure that the reducing gap between Sandwell, in terms of education and training attainment, is maintained
4.5. FACTORS AFFECTING ECONOMIC AND SOCIAL EXCLUSION IN SANDWELL
Economic Context
Socioeconomic exclusion as a result of deprivation can lead to low self esteem, lack of ambition, benefit dependency and contribute towards poor health. This is a loss of local potential that hinders economic growth.
HEALTH
A healthier population will increase the economic output of the Borough. As Dame Carol Black identified (2008)119‘a person’s health affects their ability to get a job and keep it’. Significantly, the benefit of increasing affluence and reducing deprivation is that it increases life expectancy and quality of life.
Figure 4.9 identifies that life expectancy in Sandwell is lower than both the West Midlands region and England. The difference is particularly prevalent amongst males, where a 2.9 years and a 3.6 years gap exist between the West Midlands and England respectively.
Moreover, life expectancy varies considerably between wards. Using averages over three years, a man living in Abbey ward is expected to live 9 years longer than someone in Soho and Victoria ward (79.7 years compared to 70.7). Similarly, for women life expectancy in Old Warley ward is 84.2 compared to Tipton Green and Great Bridge ward, which is 77.4 years - a difference of 6.8 years (Sandwell PCT, 2009)120.
105 Figure 4.9: Life Expectancy at Birth January 2006 to December 2008
Life Expectancy at Birth Jan 06 - Dec 08
84 82 80 Life Expectancy at Birth; 78 Males 76 Life Expectancy at Birth; Females 74 72 70 Sandwell West Midlands England
Source: Office for National Statistics - Last Updated 21 Oct 2009
In the 2001 census, people were asked about their general health. Again inequalities between Sandwell, the region and national results were found. Figure 4.10 below shows that Sandwell has a higher proportion of all people with limiting long-term illness; all people not in good health; and all people not in good health and with limiting long-term illness. This is supported by the findings in WMRO’s latest report, which identified that poor health is predominant in communities which suffer persistent problems with multiple deprivation. Increased concentration was found in Birmingham, Solihull and the Black Country121.
Figure 4.10: A Comparative Health Profile of Sandwell
A Comparative Health Profile of Sandwell
25%
20% All People - Limiting long-term illness 15% All People - Not Good Health 10% All People - Not Good Health & 5% with Limiting long-term illness
0% Sandwell Black West England and Country Midlands Wales
Source: 2001 Census – Census Area Statistics
106 The health profiles compiled by the Association of Public Health Observatory (APHO) stated that ‘the health of the people in Sandwell is generally worse than the England average’. The Sandwell profile identified that the Borough remained higher than the England average for early deaths as a result of heart disease, strokes and cancer; smoking related deaths; and hospital stays for alcohol related harm. However, rates of violent crime, hip fractures in over 65s and excess winter deaths are similar to the England average, whereas new case of malignant melanoma and rates of roads injuries were lower than the England average (APHO, 2010)122.
Key Issues
• Life expectancy in Sandwell is lower than both the West Midlands region and England. The difference is particularly prevalent amongst males, where a 2.9 year and 3.6 year gap exist with the West Midlands and England respectively.
• Sandwell has a higher proportion of all people with limiting long-term illness; all people not in good health; and all people not in good health and with limiting long-term illness compared to the region, and England and Wales.
TEENAGE PREGNANCY
Economic Context
Future opportunities for the individuals concerned and lost potential output for the local economy can result where teenage pregnancy is not supported by an adequate pathway into work where appropriate.
Sandwell has high levels of teenage pregnancy. This is not to say that all teenage pregnancy is an indicator of poverty but high levels of unplanned or planned teenage pregnancy in an area often reflect a perceived limited life chance. A study by Carter and Coleman (2006), identified that planned teenage pregnancy amongst children from deprived backgrounds were often seen as offering ‘young women a chance to change their life for the better, unlike most alternative ways of changing their life, such as education, training or employment’123
Figure 4.11 shows that the proportion of women pregnant aged 15-17 between 2001-2008 in Sandwell are stubbornly above the Black Country, West Midlands region and England levels. However, the gap has deceased in this period from 21.3 per 1,000 to 15.5 per 1,000 with the England and Wales rate.
107 Figure 4.11: Conceptions to Women Aged 15-17, 2001-2008
Conceptions to Women aged 15-17, 2001-2008
70 60 50 Sandwell 40 Black Country 30 West Midlands Region 20 England and Wales 10 Conceptions per 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 Year
Source: Office for National Statistics (ONS)
Key Issues
Ensure that there is a focus on supportive action within appropriate NESPs.
CHILD POVERTY
Economic Context
Child poverty results in lower educational attainment in schools leading to lower skills and employment opportunities in adult life. The consequence is higher rates of unemployment, social and financial exclusion, which are all detrimental to the Borough’s economy.
A key government concern is child poverty. Reducing child poverty is seen as one solution to alleviate social exclusion in adulthood. Table 4.13 indicates that Sandwell has higher rates than England, the West Midlands region, Coventry, Dudley, Solihull and Walsall. However, the Borough’s rate is lower than Birmingham and the same as Wolverhampton. Significantly, Sandwell’s rate of change is comparatively low; however, the proportion of children in poverty has risen from 2006 to 2008. Currently, Sandwell ranks 26th nationally in the list of authorities with the highest rates of child poverty; this is within the worst 10% of all authorities (Research Sandwell, 2010)124.
108 Table 4.13: Child Poverty Rates and Change 2006-2008 % of Children in "Poverty" Change
2006 2007 2008 2007-08 2006-08 England 20.8% 21.6% 20.9% -0.7% 0.1% West Midlands Region 22.9% 24.0% 23.3% -0.7% 0.4% Birmingham 35.8% 37.9% 35.9% -2.0% 0.1% Coventry 26.2% 27.8% 26.9% -0.9% 0.7% Dudley 21.2% 22.1% 22.0% -0.1% 0.8% Sandwell 30.4% 31.6% 30.8% -0.8% 0.4% Solihull 14.7% 15.2% 15.2% 0.0% 0.5% Walsall 27.8% 29.6% 28.4% -1.2% 0.6% Wolverhampton 29.6% 30.7% 30.8% 0.1% 1.2% Source HMRC from Research Sandwell N116 Proportion of Children in Poverty (2010).
At ward level Sandwell’s child poverty rates vary considerably, ranging from 17.5% in Newton to 49.6% in Soho and Victoria. Significantly, the greatest increases, between 2006 and 2008, have been in Princes End (4.4%); Langley (3.0%) and Friar Park (2.3%). The greatest decreases are in St Pauls (-2.1%), Great Bridge (-1.8%) and Greets Green and Lying (-1.3%). Figure 4.12 identifies Sandwell’s child poverty rates at Lower Super Output Area (LSOA) (Research Sandwell, 2010)125.
109 Figure 4.12: Sandwell’s Children in Poverty at LSOA level 2008
Source: HMRC from Research Sandwell N116 Proportion of Children in Poverty (2010).
110 Key Issues
High incidence of child poverty
Considerable variations at ward level
THE ECONOMIC IMPACT OF DEBT IN SANDWELL
Economic Context
Debt impacts negatively on the borough economically by reducing purchasing power, wealth in circulation and lost productivity. Psychologically it impacts negatively on health and consequently the ability to work as well as the confidence of individuals to upgrade skills. Socially, debt can damage social cohesion, lower aspiration and reduce social mobility.
Research undertaken for Sandwell MBC (MEL 2010)126 estimates transfer payments to borough residents to be worth £231,583 weekly, with an additional £2.3 million in one off or back payments. In total this amounts to a projected £14.3 million annually. The Report estimates an annual £28 million generated locally through the multiplier effect. A qualitative aspect of the study finds that almost all additional income received through benefits is spent and that recipients have a high propensity to consume locally, although the benefits of this may be lost in areas bordering neighbouring boroughs.
Debt affects the full spectrum of Sandwell residents, with wide variations between wards (see table 4.14).
Table 4.14: Variations in Average Debt Levels by Ward
Average debt exceeds £20,000 Average debt less than £12,500 • Great Barr and Yew Tree • Soho and Victoria • Newton • Greets Green and Lyng • Oldbury • Tividale • Wednesbury South • West Bromwich Central • Old Warley • Hately Heath • Charlemont and Grove Vale • Great Bridge
Source: MEL (2010) Reducing debt and helping the local economy
Research by MEL (2010)127 shows that those employed for 30 hours per week or more have the highest average individual debt (£24,685), whereas the highest average household debt in Sandwell (£38,081) were found in households with a monthly income of £1,500 - £1,999.
111 Key Issues
• The need to recognise strategically that the cost of poverty and debt to the borough is high both in the short and long term.
• Poverty and debt leads to lost output, low aspiration and associated problems such as poor health and ability to access opportunities.
DEPRIVATION
The most commonly used Indices of Deprivation is the Index of Multi Deprivation 2007 (IMD 2007). This is the most current data available. ‘Six local authority district level summary measures of the IMD [in] 2007 [were] produced. No single summary measure is favoured over another: there is no single best way of describing or comparing England’s 354 local authority districts’ (DCLG, 2007)128. The findings show that Sandwell is, in 5 out of 6 cases, in the top 14 regarding higher levels of deprivation. However, with regard to rank of local concentration, Sandwell was 47th out of 354 local authorities. Therefore, the borough high levels of deprivation are less concentrated by comparison (see table 4.15).
Table 4.15: Indices of Deprivation 2007: Sandwell Summary IMD Measure Sandwell Rank of Average Score (is the population weighted average of the combined 14/354 scores for the LSOAs in a local authority district) Rank of Average Rank (is the population weighted average of the combined 10/354 ranks for the LSOAs in a local authority district) Rank of Extent (is the proportion of a local authority district‘s population 10/354 living in the most deprived LSOAs in the country) Rank of Local Concentration (is the population weighted average of the ranks of a district’s most deprived LSOAs that contain exactly 10% of the 47/354 local authority district’s population) Rank of Income Scale (is the number of people who are income deprived) 11/354 Rank of Employment Scale (is the number of people who are employment 14/354 deprived) Source: DCLG - last updated 7 Dec 2007
Figure 4.13 indicates that Friar Park, Princes End, Wednesbury South, Hateley Heath, Great Bridge, West Bromwich Central, Greets Green and Lyng, Saint Pauls, Soho and Victoria, Smethwick, and the Cradley Heath wards all have Lower Super Output Areas (LSOAs) that are in the top 5% most deprived areas nationally.
112 Figure 4.13: Index of Multiple Deprivation 2007
Source: DCLG 2007
Research undertaken for the Department of Community and Local Government classified deprived areas into four types129.
• Escalator - these are areas where most people who move out go to less deprived areas, whilst those moving in come from more deprived areas. They are areas where people tend to move to when they are on their way up to improved economic situations, moving on as they continue to progress
• Gentrifier – these are areas where most people who move in come from less deprived areas, whilst those moving out go to more deprived areas. In most cases, they are areas which are improving socially, with deprivation falling over time
• Isolate – these are areas where people moving in come from similarly or more deprived areas and people moving out also go to more deprived areas. These are areas which have relatively low population turnover, with populations unable to break out of living in relatively deprived areas
• Transit – these are areas where people moving in come from less deprived areas and people moving out also go to less deprived areas. These tend to be places with high population turnover, perhaps providing a first rung on the housing ladder for young people who move elsewhere as their careers progress
113
This is significant to understanding how local communities have evolved and are likely to develop in the future. In Sandwell the deprived areas are predominantly classified as Isolate. This effectively identifies that Sandwell has areas of persistent deprivation. Therefore, with regard to socioeconomic development, national policy needs to address the structural causes of these problems. Currently, these areas have NESPs that aim to address the priorities in these communities (see sub-section: Sandwell’s Ward Based Response to Economic Exclusion and Deprivation).
Key Issues
Sandwell’s has a high level of overall and persistent deprivation
The Borough has high concentrations of deprivation in specific wards, suggesting the need for targeting
Sandwell’s ‘isolate’ categorisation suggests that the local resident population have difficulty moving to less deprived areas.
SOCIOECONOMIC EXCLUSION
Socioeconomic exclusion is a key concern for the borough with benefit dependency rates particularly high. Policy thinking aims to target the young before they end up in a life on benefits. An important indicator that identifies potential proliferation of benefit dependency, and consequently socioeconomic exclusion, is the numbers and proportion of young people classified as ‘Not in Education Employment or Training’ (NEET).
Table 4.16 highlights the problem facing Sandwell in this regard. The figures are: 1.7%, 1.0% and 2.1% above the levels of England, the West Midlands region and the Black Country respectively. Despite a decline in the future 16- 18 cohort there is still a need to increase the range of post-16 places to accommodate those currently not participating, and targeting such provision at residents who are classed as NEET. Government statistics show that Sandwell has the highest NEET rate within the Black Country. The official level of NEET fell to 9.1% (adjusted) in September 2010 (676 young people), and represents a decrease of 29 young people from September 2009. (The current official system of counting NEET uses a cohort size of 7,523 to calculate the official NEET figure of 9.1%. However, when the number of those residents who are NEET is compared to the actual cohort of Sandwell residents aged 16-18, circa 11,700; the local NEET figure is 4.8%. The disparity between the ‘official’ and ‘local’ figures is caused by the large number of residents receiving learning outside Sandwell; these are excluded from the ‘official’ calculations.).
At ward level, using analysis carried out on Black Country Connexions data by Research Sandwell, the lowest proportion of NEET were Abbey, and Great
114 Barr with Yew Tree and the highest proportion were Friar Park and Princes End130.
Table 4.16: Proportion of 16-18 Year Olds NEET: September 2010 [4]
16-18 year % 16-18 yr olds known 16-18 year olds olds whose to NEET [2] [3] current Connexions Adjusted activity is [1] NEET % not known West Midlands 193,337 13,627 8.1% 26.4% Sandwell 7,523 676 9.1% 14.4% Dudley 13,891 666 4.9% 13.3% Walsall 10,783 836 8.0% 14.4% Wolverhampton 8,609 605 7.3% 12.8% Black Country 40,806 2,783 7.0% 13.7% Birmingham 36,427 3,834 11.5% 39.1% Coventry 11,489 678 7.3% 19.4% Solihull 10,191 811 8.6% 45.1% ENGLAND 1,759,282 111,858 7.4% 24.1% Source: DCSF 13 December 2010 Notes: [1] The number of 16-18 year olds known to Connexions includes those whose education establishment is located in the local authority area, regardless of where the young person resides [2] 16-18 year olds known to be undertaking a Gap Year, or in custody, are not recorded by Connexions as NEET [3] The number and % of 16-18 year olds NEET have been adjusted to assume a proportion of those whose current activity is not known are NEET [4] The figures above cannot be compared with the DfE estimate of the proportion of young people NEET (SFR 20/2010). The DfE figures use a range of data from different sources to estimate the proportion of the population that is NEET, and relate to the young person's academic age
SANDWELL’S WARD BASED RESPONSE TO ECONOMIC EXCLUSION AND DEPRIVATION
Economic Context
In order to understand how the borough is doing in respect to supporting people in deprived areas back into the formal economy Sandwell MBC has produced Neighbourhood Employments and Skills Plans (NESPs) for its priority wards to understand local and diverse needs.
As identified above, when ward data is available this can vary considerably from the borough norm. With regard to socioeconomic inequalities, it is important to acknowledge these differences and if possible tackle these issues at ward level.
115
Currently, there are 13 priority wards in Sandwell, which cover the 8 City Region Employment and Skills Multi Area Agreement wards and 5 Floor Target Action Plan wards (Sandwell Partnership, 2007)131. For each of these wards there is a Neighbourhood Employment and Skills Plan (NESP)132 that contains ward level data and is part of an ongoing process aiming to reduce inequalities between the wards, the borough and the region by removing barriers to employment and training.
As discussed in the section: Deprivation, Sandwell’s’ deprived areas are mainly classified as Isolate and as a consequence deprivation in these areas is persistent. The NESPs not only show the local priorities (above) to help people back into employment but also identify gaps in provision.
The NESPs, last updated in June 2010, reflect the changes that have taken place over the past 12 months. Representatives from each of the 6 towns have been involved in consultation to understand the local priorities and update the actions that need to take place to ensure outcomes are achieved. This consultation process identified 3 priorities for each of the 13 wards, which included addressing sustainable employment, BME worklessness; engaging with employers etc. Table 4.17 identifies these priorities.
Table 4.17: Key Priorities for Priority NESP Wards Princes End Smethwick • Addressing worklessness amongst • Addressing lone parents the 18-24 year olds worklessness
• Addressing sustainable employment • Addressing BME group worklessness
• Addressing the high proportion of • Engaging with employers residents with low qualifications and benefits dependency
West Bromwich Central Greets Green and Lyng • Addressing mid to long term • Addressing long term unemployment unemployment (6 months plus) • Addressing 50+ unemployment • Addressing BME worklessness • Addressing the transitional position • Addressing 25-49 worklessness, owing to end of the Greets Green especially focussing on recent Partnership groups coming off out of work benefits
116 St Pauls Soho and Victoria • Addressing vulnerable lone parents • Addressing vulnerable lone parents worklessness worklessness
• Addressing the high proportion of • Addressing the high proportion of residents with low qualifications residents with no qualifications
• Addressing BME group worklessness • Addressing BME worklessness for targeted groups – specific attention to new communities/new arrivals Friar Park Oldbury • Addressing the high proportion of • Addressing the high level of residents with low level qualifications worklessness in BME groups and no qualifications • Addressing male worklessness • Addressing rapidly increasing levels of JSA claimants, especially amongst • Addressing a higher proportion the 18-24 age group unemployed for less than 6 months (sustainable employment) • Addressing a higher proportion of those unemployed for 1 year and over Tipton Green Wednesbury South • Addressing worklessness amongst • Addressing the higher than borough 18-24 year olds level claiming out of work benefits
• Addressing BME group worklessness • Addressing the higher proportion claiming JSA from 6 months to 1 year • Addressing the high proportion of residents with low and no • Addressing worklessness amongst qualifications the 18-24 and 50 and over age groups Hateley Heath Bristnall • Addressing 16-24 year old sustained • Addressing the higher than borough employment level without qualifications
• Addressing the high proportion of • Addressing worklessness among the residents with low qualifications and 18 to 24 age group low work based skills • Addressing a higher proportion • Addressing the high proportion of unemployed for less than 6 months residents in long-term unemployment (sustainable employment) (1 year plus) Great Bridge • Addressing benefit dependency, especially amongst men
• Addressing worklessness amongst the 18-24 year olds
• Addressing the high proportion of residents with no qualifications
117 Significantly, the success of the NESPs for the priority wards has led to creating NESPs for the remaining 11 wards.
All Sandwell NESPs currently completed can be seen at - http://sandwelltrends.info/themedpages/NESP26
Key Issues
• Delivery of the priorities identified for each of Sandwell’s wards within the NESPs.
• The need to ensure that gaps in remedial provision identified within the NESPs are filled.
118 SECTION 5: SUSTAINABLE ECONOMIC GROWTH
5.1. INTRODUCTION
This section of Sandwell’s Local Economic Assessment provides an overview of the Borough’s economy and its future challenges within the context of sustainable economic growth.
The Government is committed to growth that is environmentally sustainable. Efficient and sustainable use of the environment can stimulate growth through innovation, resource efficiency and new markets. It can also reduce future risks to the economy.
5.2. DEVELOPING SANDWELL’S LOW CARBON ECONOMY
Economic Context
The development of the low carbon economy offers many benefits including a reduction in a localities overall carbon footprint, as well as reducing overall costs to businesses as a result of the introduction of efficient processes. There is a need to reduce dependence on imported fossil fuels and the associated long term vulnerability of energy users to supply shortages and unit price increases.
KEY SECTORS FOR SANDWELL’S LOW CARBON ECONOMY
Following on from the Low Carbon Economy study that was undertaken at a West Midlands level by Atkins (2010), further detailed work has been undertaken at a Sandwell level using a ranking exercise133 to identify which sectors provide the most opportunity for development of a Low Carbon Economy in Sandwell. Key opportunities for the Borough were found to be in the following sectors:
• construction; • manufacture of materials and fabricated metal products; and, • manufacture of motor vehicles and transport.
These sectors are considered to be attractive for Sandwell for the following reasons:
• Construction: Sandwell has reasonable levels of employment across the construction sector with a particular focus on building installation, demolition and earthmoving and insulation work. Regulatory pressure to reduce carbon emissions associated with building construction provide opportunity to the sector and Sandwell may be well placed for construction of low carbon buildings off site, and a specialism in low carbon civil engineering works;
119 • Manufacture of Materials and Fabricated Metal Products; Sandwell has strength within this sector across a range of sub-sectors and has the second largest number of businesses within the City Region. The main pressure on this sector comes from increased energy costs and therefore opportunities are in the form of lean manufacturing for the sector to retain competitiveness. Opportunities are in the production of components for the low carbon transport and energy sector; • Manufacture of Motor Vehicles and Transport; whilst not strong in the manufacture of motor vehicles, Sandwell is strong in vehicle coachwork and bicycle production. The automotive industry faces international competition, therefore decarbonising the sector is important, as is low carbon products (e.g. lightweight coachwork to improve vehicle efficiency) to meet stricter vehicle emission taxes. Alternative low carbon transport methods are being encouraged nationwide and this could provide opportunities to the area.
Opportunities that were considered to have the potential to create jobs included the following:
• Construction: Low carbon renovation of housing stock; Off-site construction of buildings; • Manufacture of “metals”; low carbon processes; Production of equipment for low carbon energy networks and vehicles; • Transport, storage and communications; sustainable logistics and rail freight; development/use of alternative fuels and associated infrastructure; • Environmental goods and services; continued establishment of metal waste and scrap sector; development of low carbon community energy companies/schemes; and • Manufacture of food and beverages; use of food waste for energy generation.
BARRIERS TO THE LOW CARBON ECONOMY IN SANDWELL
Low carbon procurement, the provision of low carbon education and planning to support the low carbon economy are all considered to be important public sector opportunities. However, there are a number of barriers that need to be overcome if these opportunities are to be maximised. Barriers are seen to include access to land, a lack of innovation (either via business or universities) within Sandwell and a lack of suitable skills (Atkins, 2010)134.
Sandwell MBC undertook a number of sector studies to identify priority sectors for development as part of the diversification of Sandwell’s economy. One of the sectors that were assessed was Green Technologies. The study concluded that there is significant scope for growth in the low carbon economy within the Borough, with an existing diverse manufacturing base making it ideally placed to expand and diversify into new low carbon products. The study concluded that:
120 • There is a need to increase awareness amongst businesses within Sandwell of the growing market opportunities within the green technologies sector, and the potential for diversification from traditional manufacturing markets; • Focus on training needs, including general business skills and specialist skills relating to green technologies; and • Identify suitable land/premises within the Borough.
Conclusion
There are many drivers of the low carbon economy, including legislation and the need to improve efficiency to reduce costs. There are significant opportunities within Sandwell, particularly within the construction and manufacturing sectors to diversify into new low carbon products and processes. This section is discussed in more detail in Appendix Five (A) and (B).
Key Issues
• To develop the sectors that are considered to have the most opportunity for development of the Local Carbon Economy in Sandwell are considered to be construction and manufacturing • To increase awareness of the potential of the low carbon economy and appropriate training needs amongst local companies • To develop a greater awareness and understanding of the wider opportunities the low carbon economy in the West Midlands and beyond can provide for Sandwell
5.3. RESOURCE USE AND RESOURCE EFFICIENCY
Economic Context
One of the key drivers of the low carbon economy is the need to develop energy efficient processes and products to ensure that businesses are able to respond to any future fuel shortages and increases in fuel prices, as well as environmental legislation and its economic cost. This serves to increase the GVA per head of Sandwell’s economy.
In 2007, Sandwell’s Annual Fuel Bill was estimated to be over £342 million for all of Sandwell’s businesses, residents and those working in Sandwell. It is assumed that at least 90% of this expenditure directly leaks out of the local economy (Sandwell MBC, 2010d)135. To increase competitiveness and productivity it is important that Sandwell’s businesses reduce their resource consumption where possible.
121 The Environmental Business Advice Service is provided through the Sustainable Development Team at Sandwell MBC. Over the past 10 years, a database of around 300 businesses has been developed. A survey of some of the businesses showed the following economic implications:
• Quantifiable cost savings for the few businesses surveyed of more than £400,000 – across all businesses in the Borough potential savings could run into £millions; • Direct cost savings through reduced energy consumption also mean reduced financial obligations under the Climate Change Levy Regulations; • More efficient use of raw materials, or increased reuse of materials previously dealt with as waste, means lower raw material purchasing costs and also lower waste disposal costs; • More efficient use of packaging, and minimising or reusing packaging, reduced (or even removes) a companies obligation under the Packaging Waste Regulations, which has a significant financial impact as registration and compliance fees have to be paid; • Reducing waste to landfill can have a noticeable economic impact as, on top of ongoing waste disposal charges, businesses have to pay Landfill Tax at current rate of £48 per tonne (this will increase from the 1 April 2011); and • Implementation of an accredited Environmental Management System (ISO 14001) has led to a number of local businesses keeping customers and contracts that they would otherwise have lost. Failure to implement such a system, and subsequent loss of business could conceivably have led to their closure. By the same token, a number of businesses have used the implementation of a certified system as a market advantage over their competitors.
Conclusion
As discussed in the previous section, sectors have been identified for Sandwell that are considered to provide opportunities for the low carbon economy. One of the drivers of these opportunities is the need to increase resource efficiency and reduce costs. Sectors that have been identified as having the most opportunities within the low carbon economy are construction and the drive to low carbon buildings; manufacturing of materials and fabricated metal products and the need to reduce energy costs to maintain competitiveness; and the manufacture of motor vehicles and transport to improve vehicle efficiency (Atkins, 2010)136. However, all businesses within the Borough need to work towards greater resource efficiency to maintain and improve productivity and competitiveness.
Key Issues
• Responding to future rises in fuel costs • Responding to growing environmental legislation and its economic cost e.g. climate change levy, producer responsibility legislation
122 • Maximising opportunities within the local carbon economy • Making businesses aware of the need to look at alternatives or off-set emissions e.g. renewable energy, green roofs and travel plans
5.4. THE ECONOMIC CONTRIBUTION OF WASTE MANAGEMENT IN SANDWELL
Economic Context
On the 29th July 2010, the Government launched its review of waste policies137, stating that it is fully committed to working towards a zero waste economy. The review will look at what policies are needed to reduce the amount of waste generated and to maximise reuse and recycling and unlock the real economic value of items that are no longer needed, whilst also considering how waste policies affect local communities, households and businesses.
SANDWELL’S WASTE IMPROVEMENT PLAN
Sandwell MBC has entered into a 25 year partnership with Serco to deliver Sandwell’s Waste Improvement Plan (WIP). The Council’s WIP will modernise the Council’s waste and cleansing services. The partnership will aim to increase street cleanliness across the Borough, improve bin collections and boost recycling rates while reducing the amount of waste sent to landfill. It will help the Council achieve Government and European recycling targets and avoid millions of pounds in potential future financial penalties and landfill taxes. By 2020, Sandwell Council aims to have at least 60% of all waste being recycled or composted, 35% of waste being turned into renewable energy and less than 5% being sent to landfill. As part of the WIP, Sandwell’s remaining non-recyclable waste will be sent to the Staffordshire Energy-from-Waste plant where it will generate renewable energy (Sandwell MBC, 2010e)138. Improved waste collection and cleansing services will help to increase the attractiveness of the Borough to both residents and businesses, and the production of renewable energy has economic benefits.
COMMERCIAL AND INDUSTRIAL WASTE
In 2005/06, estimated commercial and industrial waste arisings were higher for Sandwell than the other three Black Country local authorities (see table 5.1).
123 Table 5.1: Commercial and Industrial Waste Arisings Estimates from the Black Country Core Strategy Authority Estimated C & I Waste Arisings (2005/06) Dudley 378,000 Sandwell 558,000 Walsall 380,000 Wolverhampton 311,000 Black Country Total 1,627,000 Black Country Total (to landfill) 795,603 Black Country Total (to treatment) 831,397 Source: Black Country Core Strategy, Waste Planning Study, reproduced in commercial and industrial waste and economic research study, final report (draft), September 2010
Although the West Midlands Regional Spatial Strategy (WMRSS) no longer has a statutory role in the planning process, the evidence gathered as a part of the strategy preparation process is still of relevance. The WMRSS presents estimates of the total amount of commercial and industrial waste arisings to 2025, the estimated arisings are shown in table 5.2. Waste arisings are estimated to be higher for Sandwell in the future than the other three Black Country authorities.
Table 5.2: Total Commercial and Industrial Waste Arisings Estimates from the West Midlands Regional Spatial Strategy Authority 2010/11 2015/16 2025/26 Dudley 384,000 444,000 568,000 Sandwell 566,000 654,000 837,000 Walsall 386,000 447,000 571,000 Wolverhampton 316,000 365,000 467,000 Black Country Total 1,652,000 1,910,000 2,443,000 West Midlands Total 7,071,000 8,178,000 10,457,000 Source: West Midlands Regional Spatial Strategy, reproduced in commercial and industrial waste and economic research study, final report (draft), September 2010
Scott Wilson was appointed by Sandwell MBC in April 2010 to carry out a commercial and industrial and economic research study. The study concludes that a significant proportion of the C&I waste currently sent to landfill in the West Midlands would be amenable for some form of recycling or recovery (including energy recovery). However, there was a significant regional shortfall in alternative treatment capacity despite there having capacity in the West Midlands region for additional recycling and recovery infrastructure (Scott Wilson 2010: 20)139. There may be some economic benefit for Sandwell in developing additional recycling/recovery capacity.
OPPORTUNITIES FLOWING FROM THE DEVELOPMENT OF SANDWELL’S WASTE SECTOR
Advantage West Midlands’ Landfill Diversion Strategy identified opportunities for waste investment at a Sandwell level. Waste management has been identified as a growth industry appropriate to the Borough. This is because it is anticipated that by 2021, the West Midlands would create some 3.7 million
124 tonnes of waste and the infrastructure currently in place is insufficient. AWM’s strategy (2009)140 identified 34 locations in the region showing that Sandwell was ideally positioned for the development of waste infrastructure for recycling, recovery and co-location.
The West Midlands Region already has a strong and diverse supply chain, with particular strengths in renewable energy and waste. Within Sandwell, there are already a number of well-established businesses within reclamation and recycling, water and waste treatment and environmental consultancy. These businesses are listed within the EnviroTrade-WM Directory 2010, AWM141. Within the Borough, there are approximately 24 businesses within the recycling sector (uksic 371,372)142. The development of new recycling/reuse methods and technologies may provide economic opportunities for existing Sandwell companies, as well as supporting the development of the waste sector within the low carbon economy.
Key Issues
• Maximising economic benefits through the introduction of Sandwell’s Waste Improvement Plan and subsequent improved collection and cleansing services and conversion of waste to renewable energy • Maximising employment and economic opportunities from new commercial and industrial waste processes • Increasing the recycling/reuse of industrial waste, and industrial processes that result in the production of lower levels of waste - potential for the low carbon economy
5.5. SANDWELL’S TRANSPORT CONNECTIVITY
Economic Context
Efficient, effective and attractive transport is crucial to achieving the objectives of improving access to jobs and skills, enhancing competitiveness, improving social inclusion and health, providing access to homes and regeneration and positively contributing to the carbon-reduction agenda.
LOCATION AND CONNECTIVITY
Being part of the West Midlands conurbation, Sandwell benefits from generally good public transport links, including main line rail services. Additionally, the Metro connects the borough to the centre of Birmingham in as little as 9 minutes from West Bromwich and to Wolverhampton City Centre in 22 minutes from West Bromwich. Sandwell has the highest concentration of roads of any area within the West Midlands, reflecting the density of the settlement pattern. The M5/M6 intersection, along with another 4 motorway junctions, falls within the Borough. Intersections between routes can cause congestion and problems for strategic access – for example for freight and for linkages between Sandwell’s main centres (WMRO, 2008)143. Complex
125 movement patterns can negatively impact on the movement of goods and services around the Borough resulting in costs to business and a reduction in the Borough’s attractiveness as a location for business investment.
The Sandwell Business Survey (Sandwell MBC, 2010g)144 ranks good transport links (44%) highest as a positive aspect of being located within the Borough.
Public Transport Access to West Bromwich, Sandwell’s Strategic Centre
West Bromwich is Sandwell’s strategic centre and therefore it is important to ensure that residents can access job opportunities available there, especially those residents from deprived areas without access to a vehicle. There are issues in the Borough about the need to change buses for some key journeys, e.g. the residential areas in the south west of the Borough to access Blackheath and West Bromwich, and the reduction of services after 6.00pm which impacts on employees working after that time and those wishing to enjoy evening leisure activities. Sandwell MBC’s Select Committee on Public Transportation (2009) has been looking at issues of bus coverage in the Borough in relation to evenings, Sundays and low coverage areas and has reached the following conclusions145:
• Access to West Bromwich by public transport – low coverage areas in the evening identified as Blackheath, Cradley Heath, Oakham, Rowley Regis, Tipton, Tividale, Warley. • Access to town centres (Blackheath, Cradley Heath, Great Bridge, Oldbury, Wednesbury, Cape Hill, Bearwood) – low coverage areas in the evening – Brades Village, Great Barr, Yew Tree • Access to local/district centres7 (North) – low coverage areas in the evening – Hill Top, Myvod • Access to local/district centres8 in the south – low coverage areas in the evening – Cradley Heath, Kenrick Estate, Springfield
Figure 5.1 shows public transport access to West Bromwich town centre for travel times of 10 minute intervals. It can be seen that there is good access to West Bromwich within 30 minutes from large parts of the Borough, with the south west of the Borough having the lowest coverage levels.
7 District centres are: Smethwick high street, Tipton, Scott Arms, Carter’s Green, Quinton) 8 Local centres are: Princes End, Old Hill, Stone Cross, Langley, Hamstead, Rood End, Queens Head – Bristnall, Smethwick high street (lower)
126 Figure 5.1: Access to West Bromwich by Public Transport
Source: Accession, 2010
Black Country Core Strategy
The Black Country Core Strategy has been through Examination in Public and the Inspector has recommended that it is sound. The strategy should therefore be legally adopted by March 2011. The Transport Strategy focuses on a step change in public transport provision that is needed to serve and link centres, improving sustainable transport facilities and services across the area, improving connectivity to national networks and improving the efficiency of the strategic highway routes. A key proposal in the strategy is a rapid transit route linking Walsall / Wednesbury / Brierley Hill and interchanging with Metro Line 1 to link up with the four Black Country Strategic Centres. It also recognises the need to improve the A41 Expressway/A4031 All Saints Junction and deliver the West Bromwich Regeneration road scheme and improvements to the Motorway junctions.
West Midlands Local Transport Plan 3
The West Midlands Local Transport Plan 3 which is currently being developed (due for completion March 2011) will outline transport priorities up to 2026. The two key outcomes of the Plan are:
127 • Economic recovery and closing the output gap; and • Creation of a clean, green low-carbon future.
The West Midlands Local Transport Plan 3 Visions and Issues Consultation, September 2009, states that there is a need to respond to two sets of challenges:
• Managing existing levels of congestion and associated problems within the Metropolitan area at the current time; and • Ensuring investment in, and provision of, appropriate and effective infrastructure to enable significant growth to take place to 2026 (accommodating planned future growth).
To respond to these challenges, the future strategy is based on:
• Smarter management, making best use of existing assets to support business growth, e.g. Active Traffic Management; • Smarter investment, to help ensure that the largest city and metropolitan area outside London has a world class transport system, and • Smarter choices by working with the business community to support their transport needs within a low carbon economy (Centro et al, 2009)146.
Conclusion
Sandwell benefits from good connectivity to the national rail and motorway networks. However, it suffers from congestion. The future strategy for transport investment is to use existing transport assets in a smarter way to support business growth.
Key Issues:
• Improving access to employment opportunities/land and premises • Reducing congestion • Promoting public transport access, particularly outside peak hours (other solutions such as car sharing, work buses, cycling, walking) • Reducing the environmental and economic impact of in and out migration for travel to work • Improving the choice of alternative modes of transport for those who don’t have access to a car • Using existing transport infrastructure in a smarter way
128 5.6. THE ECONOMIC IMPACT OF SANDWELL’S HOUSING PROVISION
Economic Context:
Ensuring that there is a sustainable mix of housing types and tenures to meet the needs of current and future residents is a key outcome of the Housing Strategy.
The wider benefit of our strategic housing outcomes to Sandwell’s economy is clearly demonstrated; including enabling a sustained and localised supply chain, job creation linked to increased training opportunities, equity realisation from existing and new housing assets, community enterprise opportunities creating social equity benefits and providing additional market confidence to local, regional and national investment partners.
CURRENT HOUSING STOCK
Sandwell’s housing land area is the most densely occupied in the West Midlands region and accommodates around 127,000 properties; with just under 90,000 being privately owned (including the private rented sector). Approximately 28% of the stock is in the social rented sector, of which the local authority owns 30,000 of these units (Sandwell MBC, 2009b)147.
Sandwell has an aging private sector stock, with at least 39,000 units being 60 years or older. There is a legacy of poor quality housing in the private sector and the recently commissioned Stock Condition Survey has estimated that around 14% of this stock has a HHSRS (Housing Health & Safety Rating System) Category One hazard that would trigger statutory action by the Council to remedy the defect. The study also estimates that an investment of £236m would need to be made to make all private sector homes decent (Sandwell MBC, 2009b)148.
Sandwell’s Housing Strategy 2008-2011
The strategic housing vision for the Borough, as set out in Sandwell’s Housing Strategy 2008-2011, is to create good quality and accessible homes where people choose to live, in safe friendly neighbourhoods, close to a range of community facilities, schools and jobs. The strategy makes it very clear that housing led initiatives are not only integral to raising housing standards and choice of tenure, but also contribute to economic stimuli by improving skills, education, employment chances, as well as providing income streams for local companies. Raising housing standards also contributes to alleviating ill health and raising educational attainment, both recognised as potential barriers to employment.
Our agreed strategic housing outcomes include the effective intervention to balance the supply and demand for affordable housing; to increase choice of accessible and affordable housing for all sections of the community; and to
129 develop housing interventions which support and promote economic the competitiveness for Sandwell and its people.
The Black Country Core Strategy also outlines the desire to provide the right accommodation and environment to attract high earners as well as providing for all existing residents. The Black Country Core Strategy will support the growth and transformation of Sandwell over the next 20 years. The growth and transformation will be concentrated in the Borough’s regeneration corridors by creating new housing and employment areas. In essence, approximately 21,000 new houses will be built.
Sandwell’s Housing Market
The Council recently refreshed its 2007 Housing Needs and Demand Study. The refreshed study highlighted the key market changes since 2007 (Sandwell MBC, 2010h)149:
Overall the volume of sales fell from 2007 to 2010. Average property prices decreased in Sandwell by a marginal 1.4% but with far higher decreases (16%) being felt in the flatted and maisonettes market. Setting the marginal 1.4% decrease in context, this occurred from a baseline price rise of 53% between late 2002 and mid 2010.
Lower quartile sales levels vary across the Borough, starting at around £54,950 in Tipton for a 1‐bed property requiring a household income level of £14,900 (single) and £18,000 (dual).
Incomes rose moderately in Sandwell, the Annual Survey of Hours and Earnings (ASHE) 2009 shows a median income of £21,714. A deposit of around £15,625 would be required to buy in the lower quartile of the Sandwell market. Despite low mortgage interest rates, the requirement for a high deposit (of 25% compared to 5% to 10% as a norm in 2007) is the key affordability problem for those wishing to buy. Due to this factor it is estimated that 94% of new forming households are unable to buy in the private market.
Entry rental levels vary across the Borough with the lowest rents, starting at around £300 a month for a 1‐bed property in West Bromwich and Tipton, requiring an income of £14,400 with an average needed across all areas of £16,800. On average 41% of concealed households forming cannot afford to rent privately and 48% cannot afford to buy in the cheapest market area in the Borough.
Particularly in view of the of the affordability and stock condition issues associated with housing in Sandwell, housing interventions are key components for the economic regeneration of the Borough. Supporting the restructuring of the housing market and providing a substantially improved ‘housing offer’ is a vital ingredient in retaining and attracting higher income households. Aligned with this is the need to broaden the opportunities for a
130 greater range of affordable home options products to meet the needs of lower income households.
Pursuing opportunities through housing investment for employment and training for local people, including using local labour agreements and apprenticeships, is a key ingredient to the future vitality of Sandwell’s economy. To further maximise housing investment impacts, the Council will continue to retain and circulate resources within the Borough for the benefit of local people and local companies.
Additional housing interventions centred on reducing the number of empty properties, raising housing standards and reducing both under and over- occupation will also have positive economic impacts for the borough. For the former, removing the negative impact caused by empty properties will stimulate local investment into effected areas. Relieving under-occupation and raising housing standards in all sectors will release many households from the effects of housing related poverty (e.g. fuel poverty) and will release household income streams which might otherwise be lost to the local economy.
Sandwell and the other three Black Country Authorities have been identified as a New Growth Point by the Government. Achieving Growth Point Status means the Government will provide support to the Black Country Authorities to enable large scale, sustainable growth. The
Sandwell’s Housing Local Investment Plan
Sandwell’s Local Housing Investment Plan further supports the delivery of the economic outcomes that are realised as outputs of the borough’s strategic housing and enabling activity. The investment plan, jointly agreed with the Homes and Communities Agency (HCA) and the Council’s partners sets out a cross-tenure programme of longer-term public and private investment of over £300 million (2010-22). In economic terms this provides a Gross Value Added (GVA) benefit to Sandwell of up to 3,300 jobs (HCA 2010) over this Plan period.
The wider benefit of good quality housing to the economy is clearly demonstrated; including enabling a sustained and localised supply chain, job creation linked to training opportunities, equity realisation from existing and new housing assets, community enterprise opportunities creating social equity benefits and through housing-led regeneration providing additional market confidence to local, regional and national investment partners.
Key Issues
• Providing accommodation choices for local people, including housing that attracts higher income households • Continue to ensure inward investment into housing and wider regeneration activity • Making the best use of assets and land, including bringing empty
131 properties back into use • Improving the quality of the housing stock aligned to creating jobs and attractive neighbourhoods where people will want to stay and to invest in
5.7. THE RELATIONSHIP BETWEEN SANDWELL’S ECONOMY, NATURAL AND HISTORIC ASSETS
HISTORIC ASSETS
Sandwell is made up of 6 towns; Oldbury, Rowley Regis, Smethwick, Tipton, Wednesbury and West Bromwich. The Black Country Study identified West Bromwich as one of the four key visitor destinations in the Black Country. Each town has its own unique character, history, traditions and attractions. Oldbury lies at the centre of Sandwell and dates back to the 13th century. Rowley Regis has the Rowley Hills providing walkers with fine views of the surrounding area. Smethwick has a rich industrial heritage and is the town that grew around James Brindley’s canals. Tipton is where James Watt’s first steam engine was housed, Wednesbury’s recent archaeological excavations have helped bring to life aspects of the medieval town’s history and Sandwell’s largest town West Bromwich is home to the Sandwell Priory, a 12th century Benedictine monastery. Sandwell is fortunate enough to have many cultural and heritage sites, and important historic sites including the the12th century Manor House, the mediaeval timber framed Tudor Oak House, the 19th Century Haden Hill House. The Galton Bridge and Bishop Asbury’s (the founder of Methodism in the U.S.A) cottage attracting visitors from across the world. The Soho Foundry in Smethwick is the location where Matthew Boulton and James Watt developed their pioneering steam engine. In total, Sandwell has 189 Listed Buildings (2 Grade I, 7 Grade II*, 180 Grade II), 4 Scheduled Ancient Monuments, 5 Historic Parks, 6 Conservation Areas, and 14 areas that are currently recorded as areas with archaeological potential (Sandwell MBC, 2010f)150.
NATURAL ASSETS
The biodiversity of the geological past has given us the Sandwell (and Black Country) we have today. Limestone and coal, allied to local peoples’ skills and other raw materials, have provided the foundation of the areas’ wealth. Today the Black Country’s Biodiversity and Geodiversity are critical components of a high quality life, and contribute significantly to the quality of the environment within Sandwell. Natural assets help to ‘green’ urban areas, offer more opportunities to escape noise and pollution, make urban areas more attractive to live and invest in and contribute towards physical and mental wellbeing.
The conservation of Biodiversity and Geodiversity are important elements in promoting Sandwell. Sustainable development demands the integrated management of the economic, social and environmental factors affecting peoples’ quality of life. Natural assets contribute to economic activity and
132 social progress, as well as being a key indicator of environmental quality. One of the objectives of the Birmingham and Black Country Biodiversity Partnership is to ‘enable the sustainable use of the natural environment to benefit the health and wellbeing of residents, workers and visitors as well as improving the local economy’, and the Black Country Geodiversity Partnership has an objective of increasing the awareness and appreciation of the Black Country’s geological heritage, and to maximise opportunities to contribute to all levels of education including life long learning.
Sandwell has two types of nature conservation sites – statutory and non- statutory. The former include Local Nature Reserves (LNR), the latter (called Local Sites by DEFRA) includes Sites of Importance for Nature Conservation (SINC) and Sites of Local Importance for Nature Conservation (SLINC). Biodiversity and Geodiversity are covered by Local Sites. In Sandwell, the total area of each is:
• 380.75 ha SINCS • 284.6 ha SLINCS • 304.1 ha LNRs151.
VISITOR ECONOMY
Visits to and usage of Sandwell’s Heritage attractions has been growing over recent years with museums and galleries receiving 260,000 visits in 2006. Sandwell has an array of parks and green spaces with 321 green spaces, covering 1200 hectares, recorded as having unrestricted access. Sandwell has 5 Grade II listed parks of significant historic interest; these include Brunswick Park in Wednesbury, Dartmouth Park in West Bromwich, Victoria Park in Tipton, Warley Woods Park in Bearwood and Great Barr Hall, Great Barr. The Sandwell Valley is within one mile of West Bromwich Town Centre and has over 2000 acres of woodland and parkland with wildfowl lakes. The footpaths include part of the Beacon Way, a 25 mile way marked trail from Sandwell Park Farm to Gentleshaw and several nature trails. The Farm also holds many fairs and events with Sandwell Park Farm and Forge Mill Farm attracting over 655,000 visitors in 2006. The Public building in West Bromwich provides a focus for cultural and arts events within the Borough.
Sandwell’s canal network dates from 1769 and Sandwell is thought to have more miles of canal than anywhere else. Sandwell offers some of the earliest and best examples of industrial canalside architecture such as bridges, aqueducts and industrial buildings (Sandwell MBC, 2007)152. The canal network is also a significant visitor attraction, providing links to Birmingham, Staffordshire, Worcestershire and beyond. Facilities adjoining and serving the canal network should be maintained and expanded to help provide a network of linked facilities and visitor hubs in particular locations, including:
• Galton Valley Canal Heritage Area, Smethwick (Sandwell MBC et al, 2009)153.
133 Business Tourism
Birmingham provides the Regional lead on Business Tourism and the International Gateway for International events for the region. In the West Midlands Business Conferencing and Events was worth £6.6bn in 2005. Sandwell’s Business visitor economy constitutes a number of venues, especially around Junction 1 of the M5. The Bethel Convention Centre opened in 2001 and can seat up to 2,500 delegates, The Public and West Bromwich Albion also have conferencing facilities, as well as several chain hotels, Holiday Inn, Park Inn and Premier Inn. They are ideally located close to the motorway for access and centrally within England. The businesses are linked to Birmingham and are situated within the ripple effect area where when Birmingham has a large event at one the main conference arenas, NEC, NIA, ICC smaller events are displaced into Sandwell venues. Occupancy is high mid-week due to business visitors travelling through the region needing to be close to Birmingham City Centre. Birmingham is a key attractor for the industry and Sandwell Venues are keen to be seen to be part of the City Marketing Company for Inward Investment and Visitor Economy – Marketing Birmingham.
Visitor Economy as a Driver of Economic Growth
The Black Country Core Strategy states that the vision for the Black Country is to deliver transformational change whilst respecting and promoting its unique heritage. The protection, promotion and expansion of existing cultural facilities, visitor attractions and associated businesses will ensure their enhanced role as key economic drivers in stimulating and regenerating the local economy. Key destinations for the visitor economy in Sandwell identified in the Black Country Core Strategy are:
• West Bromwich Town Centre (including The Public Art Gallery and a growing Learning and Cultural Quarter; and • Sandwell Valley and Park Farm (a working farm and Country Park with archaeological interest).
The Black Country Core Strategy also highlights the need to enhance and promote physical and promotional links to visitor attractions close to the Black Country, particularly links to Birmingham as a Global City and a business economy destination. Additional facilities which support the visitor economy and the business tourism sector will be encouraged and promoted, focused within the Black Country’s strategic centres including West Bromwich. Facilities will include the development of a network of hotels and other accommodation with strong links to key destinations and associated conference facilities.
The Black Country Core Strategy also highlights the need to promote and protect valuable cultural attractions and events which represent and celebrate the cultural and ethnic diversity of the Black Country. This includes the protection of valuable cultural and religious buildings and the promotion of cultural, religious and community festivals at a rage of locations including
134 Sandwell Valley (Sandwell MBC et al, 2009)154. The protection and promotion of the historic character and local distinctiveness of Sandwell is a key element of the transformation of the Borough. This includes historic buildings, historic parks and special landscape areas.
Key Issues
• Maximise the visitor economy including business tourism through improved promotion. • Increase the use of cultural and historic assets to act as an economic driver. • Promote the cultural and historic assets of the Borough with potential inward investors. • Maximise the use of natural assets, including Sandwell Valley, as a driver for the visitor economy.
135 136 SECTION 6: ECONOMIC RESILIENCE
6.1. SANDWELL’S ECONOMIC RESILIENCE
Economic Context
Resilience is a concept used to describe Sandwell’s ability to withstand and respond to shocks in the external environment such as economic downturn or cuts in public expenditure.
In order to better understand the economic challenges facing the West Midlands and Sandwell, both AWM (2010b)155 and Experian (2010a)156 have developed a Community Economic Resilience Index. These seek to:
• Identify and rank local economies’ overall resilience;
• Give a sense of the degree of difference in the resilience of different local economies;
• Identify the underpinning drivers for each area’s level of resilience (e.g. economic structure, skills profile, job density, etc);
• Inform thinking on the prioritisation of issues and interventions;
• Enable monitoring of change going forward, to provide an ‘early warning’ of emerging issues and relative under / over performance.
Overall, the Index identifies Sandwell as the least resilient economy in the West Midland region. From the social domain, Sandwell;
• Residents have a combination of low employment rates, high unemployment and poor skills profiles;
• Residents have a high tendency to serve workplaces in other districts;
• Employment tends to be in low value adding activities;
• Characterised by limited employment opportunities, a high level of out- commuting a high level of social exclusion.
In terms of functional geography; Sandwell is classified as a ‘traditional manufacturing economy which is likely to shrink further in future years, be badly placed to develop alternative areas of the economy and transfer people into new skills and employment opportunities (see figure 6.1).
137 Figure 6.1: Economic and Labour Market Domains – Links with Functional Geography
Source: AWM (2010b)157
An over view of Sandwell’s scores used to calculate economic reilience is shown in Appendix Eight.
An complementary piece of work has also been undertaken by Experian (2010a) which helps confirm the position for Sandwell identified by AWM (2010b) (see table 6.1). This study ‘takes a holistic view of local areas and ranks them in terms of their ability to respond to economic shocks, such as public sector cuts’. It uses four key themes, business, community, people and place, based on thirty three supporting variables to evaluate resilience within local authority districts (LADs) across the country. The four Black Country boroughs are all placed within the bottom ten of the national overall with Sandwell ranking 321.This places it within the bottom ten LADs, fourth worst position in the country.
138 Table 6.1: Resilience within LADs across the Black Country National LAD Observations Ranking 321 Sandwell Fourth poorest in the country in terms of qualifications and a low level of ‘people resilience’. 315 Walsall A low level of ‘people resilience’ along with a high rate of crime and little green space. 304 Wolverhampton Low community resilience, high levels of deprivation, benefit claimants and low level of social cohesion. 281 Dudley No outliers? 234 Birmingham Emerges as the lead district in terms of vulnerable sectors, business births and insolvency rates but performs less well in terms of high growth sectors and self employed proportion of the workforce. Birmingham also has high levels of deprivation, benefit claimants and low levels of social cohesion. Source: Experian (2010a)158
Key Issues:
Two independent analysis rate Sandwell’s economic resilience as low.
All four Black Country boroughs perform poorly
Experian (2010a) have highlighted Sandwell particular weaknesses as being:
• Vulnerable sectors • Low self-employment • Low job density • Lack of resilient sectors • High level of insolvency
Develop the sectors of the economy that could potentially contribute to increasing Sandwell’s resilience, such as the low carbon economy
139
140 APPENDICES
APPENDIX ONE
Business density is defined as the number of businesses per 1000 people of working age population. This gives an indication of the size of the business centre and the extent of local employment opportunities available to local people.
APPENDIX TWO
Bryson (2006) has noted that not all jobs are the same in terms of their effect on the local economy with manufacturing having a greater multiplier effect than services. It is estimated that every 100 manufacturing job supports 290 jobs elsewhere in the economy, compared with 154 for business services and 88 for retail. This has important policy implication for Sandwell’s approach to inward investment, enterprise support and the achievement of the Borough’s economic objectives.
APPENDIX THREE
• Adopt a short, medium and long term Digital Sandwell Action Plan to ensure effective and valued interventions are addressed by the Council.
• Engage with, and obtain information from, local companies (i.e. their business needs, adoption and use of broadband and ICT) via FinditinSandwell survey, themed Breakfast Club and follow up ICT clinics.
• Target companies by (1) current and future business needs, (2) current broadband target companies, (3) ‘Sandwell Economic Prospectus’ priority sectors.
• Establish Memorandum of Understanding for joint working with ‘Technology at Work’.
• Define success criteria and associated measures for the overall programme.
APPENDIX FOUR
Findings from research conducted by Birmingham University (Birmingham Post 2/9/10) supports the view that ‘the region’s thriving manufacturers are set to offer thousands of jobs in the coming years – but that this success story could crash due to a lack of skills’. The report says that ‘over the next five
141 years, the West Midlands will see around 90,000 hard to fill manufacturing as the UK’s buoyant industrial base turns out more products than in 1966 when employment in the sector was at its peak. Some firms have even admitted that an ageing workforce and a lack of fresh blood mean they will have to shut up shop in the next ten years and others resorted to taking on 75 year olds as they couldn’t find suitably qualified younger people’.
Professor John Bryson, author of the study says that, ‘UK manufacturing is in good health thanks to its focus on design and innovation which means British products can not be copied by low cost countries,’ and ‘a lack of skills is as serious a threat as globalisation to industry’. However, other pressures are also currently changing the structure of the workforce.
APPENDIX FOUR (B)
The way labour markets behave has changed significantly since the early 1990s, driven by changes in technology, globalising trade, the international off-shoring of jobs which affect job opportunities and skill demands. This change has been characterised by a polarisation of recruitment into the lowest and highest income occupations, squeezing those in the middle. Broadly this means that high knowledge based specialist occupations such as doctors and legal specialists have seen increased demand for their services. At the other end of the scale those involved in hands-on, difficult to automate delivery such as hotel cleaners and security personnel have also found increasing demand for their services. The middle band of workers such as secretaries, bank clerks and office managers have conversely seen a significant decline. The Economist (11/9/2010) suggests that this is a result of IT speeding up routine bits of work formerly undertaken in the middle band and increasing productivity at the expense of employment. This has profound implications for labour market policy in Sandwell and elsewhere in the western world’s economies. A continuation of the trend is likely to mean that many people displaced from the middle band may have to accept employment in the lowest income band with its attendant long hours, low pay and often monotonous and poor working conditions. It may also mean that the established rule whereby increasing educational attainment correlating with increasing income is only partly true. Those going through education have to accept that they will have to go all the way through to masters/doctorate level if they are to maximise employment opportunity. This will put Sandwell residents, who have a low propensity to enter higher education at a disadvantage to counterparts elsewhere.
142 APPENDIX FIVE (A)
Identifying Sectors in the West Midlands with Low Carbon Opportunities
Work has been undertaken by Atkins in 2009159 on behalf of Advantage West Midlands and the West Midlands Regional Observatory to identify the barriers and opportunities to develop the Regions Local Carbon Economy. The 2009 study identified eight key sectors as providing low carbon opportunities regionally based on:
• the level of carbon regulation affecting the sector; • the scale of the opportunity; • the existing regional strengths; • existing regional action, and • availability of low carbon technologies.
The identified sectors were: • manufacture of non-metallic mineral goods; • manufacture of motor vehicles and transport; • manufacture of metals, fabricated metal products and electrical equipment; • construction; • environmental goods and services; • manufacture of food and beverages; • transport, communication and storage; and • public services.
Opportunities in Sandwell for the Low Carbon Economy
Sandwell’s employment in the eight key sectors identified in section 4.1.3 is fairly diverse with the public sector, construction and manufacturing all being significant, and transport, storage and communications and food and drink being well represented.
As part of the Low Carbon Economy study, Atkins identified the proportion of businesses in sectors with diversification opportunities within the West Midlands Local Authorities areas. The table below shows that for Sandwell, transport and communications, manufacture of metals, machinery and electrical equipment and construction sectors contain the greatest proportion of businesses with potential for green diversification. Diversification into new products is important due to the innovation involved and the potential for growth.
143 Key Issues
• Sectors that are considered to have the most opportunity for development of the Local Carbon Economy in Sandwell are considered to be construction and manufacturing • There is a need to increase awareness and training amongst local companies
APPENDIX FIVE (B)
The Economic Contribution of Waste Management in Sandwell
Municipal Waste in Sandwell
Since the autumn of 2008, there has been a decline in Sandwell in residual solid waste due in part, it is thought, to the economic downturn and the introduction of co-mingled recycling collections. This is reflective of the national picture. In 2008/09, 708kg of residual waste was recorded per Sandwell household. This is greater than the waste per household in the West Midlands region (698.4 kg). From 2007/08 to 2008/09, the amount of residual waste in Sandwell reduced by 39kg per household compared with a reduction of 65.7 kg for the West Midlands region.
The amount of municipal waste that has been recovered and recycled/composted in Sandwell has risen steadily over the last four years, resulting in the amount of waste going to landfill reducing. However, the table below shows that in 2008/09 the amount of household waste sent for reuse, recycling or composting was lower in Sandwell than the West Midlands and England average.
Household waste sent for reuse, recycling or composting in Sandwell 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 % % % % % % % Sandwell 9.0 9.2 10.8 16.8 20.4 25.3 27.2 West 13.0 15.7 19.9 25.1 28.6 33.0 36.6 Midlands England 14.5 17.8 22.5 26.7 30.9 34.5 37.6 Source: Department for the Environment, Food and Rural Affairs (DEFRA). Local Authority data from 2002/03 to 2006/07 was downloaded from WasteDataFlow. Local Authority data for 2007/08 and 2008/09 was downloaded from Floor Target Interactive. National and regional figures were collected from the Waste Statistics on DEFRA's website. Source: ONS Toolkit to Support LEAs
The table below shows that in 2008/09 the amount of municipal waste sent to landfill in Sandwell was significantly higher than the West Midlands region.
144 Municipal Waste sent to Landfill in Sandwell 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 % % % % % % % Sandwell 70.1 78.4 - 77.8 68.5 65.6 55.6 West 54.0 53.0 49.0 43.6 41.5 37.3 32.5 Midlands England 75.0 72.0 66.9 62.2 57.9 54.4 50.3 Source: Department for the Environment, Food and Rural Affairs (DEFRA). Local Authority data from 2002/03 to 2006/07 was downloaded from WasteDataFlow. Local Authority data for 2007/08 and 2008/09 was downloaded from Floor Target Interactive. National and regional figures were collect from the Waste Statistics on DEFRA's website. Source: ONS Toolkit to Support LEAs
APPENDIX SIX
The local authority, with its partners, is currently involved in the following initiatives to reduce the skills gap:
• Community Benefit Clauses: Sandwell MBC is using community benefit clauses in all of its major regeneration contracts in order to ensure that local people benefit from the training and employment opportunities that can be gained through them. The local authority takes on approximately 200 apprentices in the four construction trades, including carpentry, bricklaying, plastering and painting. This is one of the largest construction apprenticeship schemes in the West Midlands. In September 2010 a ‘Construction Hub’ was established to specifically support young offenders, enabling them to develop the skills needed to gain future employment.
• Graduate Engagement and Retention: Sandwell MBC has recognised that there is a need not only to retain graduates within the borough, but to engage with undergraduates within the area as part of their studies. Work is being undertaken with the West Midlands University Career Service (WMUCS) in order to ensure that all of the opportunities that we have within Sandwell are communicated with the universities.
• Youth Employment: Following on from the Government’s Future Job Fund (FJF) programme, the local authority has developed a project to support young people who may need to improve their skills and gain employment. A series of apprenticeships are being developed across a variety of employers specifically aimed at young people aged 16-20. The apprenticeships will be based across the private sector, community and voluntary sector, and health sector.
• Skills Policy: The previous Government focused on individuals being qualified to at least level 2. It is anticipated that the Coalition Government will focus on people being qualified to level 3. The Train to Gain provision will cease in March 2011 and will be replaced by
145 additional apprenticeship placements. Employers will be encouraged to invest in their staff in order to assist their businesses to develop.
• Employment Policy: The Coalition Government are looking at new ways to deliver employment support. The Flexible New Deal programme that is currently operating will be phased out by June 2011. This will be replaced by The Work Programme. This will be delivered by large providers who are able to bank role (as payments will only be made on job outcomes). Sandwell MBC Authority has expressed an interest in becoming an end-to-end deliverer as part of this programme and has been liaising with the prime contractors directly.
• Working Neighbourhood Fund (WNF): This is used to assist people on out of work benefits to improve their skills and gain future sustainable employment. The community and voluntary sector deliver the client journey, including engagement, personal support/mentoring, training and job brokerage in each of the borough six towns.
• European Social Fund (ESF): This contract is held to target low level skills and boost employment within the borough. Although this finishes December 2010, Sandwell MBC are putting forward a bid for the next round.
146 Proportion of Businesses with Potential for Green Diversification by Sector (new products) Sandwell Dudley Walsall W’hampton Birmingham West Mids Total 23.6% 24.8% 25.0% 18.3% 16.2% 20.5%
Transport and 6.7% 5.5% 6.3% 4.9% 3.8% 4.8% communication s Manufacture of 7.9% 6.4% 7.5% 4.9% 3.5% 4.0% metals, machinery and electrical equipment Construction 9.0% 12.8% 11.3% 8.5% 7.7% 10.4%
Manufacture of 0.0% 0.0% 0.0% 0.0% 0.3% 0.4% motor vehicles and transport equipment Farming, food 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% and drink Environmental 0.0% 0.0% 0.0% 0.0% 0.3% 0.2% goods and services Manufacture of 0.0% 0.0% 0.0% 0.0% 0.3% 0.3% non-metallic mineral products Source: 2008, ONS Annual business inquiry workplace analysis. WMRO Low Carbon Economy in the West Midlands Study, March 2010
The study also looked at the proportion of employees in sectors with diversification opportunities by West Midlands Local Authority area. The following table shows that manufacture of metals, machinery and electrical equipment, construction and transport and communications contain the highest proportion of employees in Sandwell, and that overall Sandwell has a higher proportion of employees in sectors with the potential to diversify than the other Black Country authorities and Birmingham. This may be beneficial for Sandwell as potential diversification into new products may result in the growth of businesses and employment within the Borough. Alternatively, diversification into new products with different and potentially more efficient manufacturing processes may result in a reduction in employment for the Borough.
147 Proportion of Employees in Sectors with Potential for Green Diversification (new products) Sandwell Dudley Walsall W’hampton Birmingham West Mids Total 31.3% 20.4% 26.5% 20.7% 16.0% 21.5%
Transport and 6.1% 4.0% 6.3% 5.2% 4.8% 5.8% communications Manufacture of 11.3% 8.7% 11.1% 7.3% 4.6% 6.3% metals, machinery and electrical equipment Construction 8.3% 5.5% 4.8% 4.5% 3.4% 4.9%
Manufacture of 1.2% 1.1% 2.3% 2.6% 1.6% 2.0% motor vehicles and transport equipment Farming, food 3.3% 0.3% 0.8% 0.7% 0.9% 1.4% and drink Environmental 0.5% 0.3% 0.8% 0.2% 0.3% 0.3% goods and services Manufacture of 0.6% 0.5% 0.3% 0.2% 0.3% 0.7% non-metallic mineral products Source: 2008, ONS Annual business inquiry workplace analysis. WMRO Low Carbon Economy in the West Midlands Study, March 2010
In terms of decarbonising opportunities (improvements to processes, techniques and materials), the following table shows that the study concluded that wholesale and retail has the greatest proportion of businesses in Sandwell with decarbonising opportunities. This may result in the introduction of more efficient process which could improve productivity within the Borough.
Proportion of Businesses with Potential for Decarbonising by Sector (improvements to processes, techniques, and materials) Sandwell Dudley Walsall W’hampton Birmingham West Mids Total 64.0% 65.1% 65.0% 69.5% 73.2% 68.9%
Public sector 7.9% 7.3% 8.8% 11.0% 10.6% 8.8% services Businesses 22.5% 25.7% 22.5% 25.6% 31.9% 29.6% services Wholesale and 25.8% 24.8% 25.0% 25.6% 23.0% 22.2% retail Tourism and 7.9% 7.3% 8.8% 7.3% 7.7% 8.2% leisure Source: 2008, ONS Annual business inquiry workplace analysis. WMRO Low Carbon Economy in the West Midlands Study, March 2010
148 In terms of decarbonising opportunities, the following table shows that the study concluded that for Sandwell, public sector services is the sector that has the greatest proportion of employees. The introduction of new processes, techniques and materials could lead to improved efficiency and productivity but that could have a negative impact on employment levels.
Proportion of Employees in Sectors with Potential for Decarbonising (improvements to processes, techniques, and materials) Sandwell Dudley Walsall W’hampton Birmingham West Mids Total 59.2% 72.2% 66.6% 73.2% 76.5% 70.2%
Public sector 22.6% 27.9% 23.4% 30.6% 32.2% 27.0% services Businesses 12.4% 18.2% 17.3% 17.3% 21.2% 17.9% services Wholesale and 18.9% 20.4% 19.2% 18.1% 14.8% 17.4% retail Tourism and 5.2% 5.8% 6.6% 7.1% 8.3% 7.9% leisure Source: 2008, ONS Annual business inquiry workplace analysis. WMRO Low Carbon Economy in the West Midlands Study, March 2010
Key Sectors for Sandwell’s Low Carbon Economy
Following on from the Low Carbon Economy study that was undertaken at a West Midlands level, further detailed work has been undertaken at a Sandwell level using a ranking exercise160 to identify which sectors provide the most opportunity for development of a Low Carbon Economy in Sandwell. Key opportunities for the Borough were found to be; • construction; • manufacture of materials and fabricated metal products; and, • manufacture of motor vehicles and transport.
These sectors are considered to be attractive for Sandwell for the following reasons:
• Construction: Sandwell has reasonable levels of employment across the construction sector with a particular focus on building installation, demolition and earthmoving and insulation work. Regulatory pressure to reduce carbon emissions associated with building construction provide opportunity to the sector and Sandwell may be well placed for construction of low carbon buildings off site, and a specialism in low carbon civil engineering works; • Manufacture of Materials and Fabricated Metal Products; Sandwell has strength within this sector across a range of sub-sectors and has the second largest number of businesses within the City Region. The main pressure on this sector comes from increased energy costs and therefore opportunities are in the form of lean manufacturing for the sector to retain competitiveness. Opportunities are in the production of components for the low carbon transport and energy sector;
149 • Manufacture of Motor Vehicles and Transport; whilst not strong in the manufacture of motor vehicles, Sandwell is strong in vehicle coachwork and bicycle production. The automotive industry faces international competition, therefore decarbonising the sector is important, as is low carbon products (e.g. lightweight coachwork to improve vehicle efficiency) to meet stricter vehicle emission taxes. Alternative low carbon transport methods are being encouraged nationwide and this could provide opportunities to the area.
Opportunities that were considered to have the potential to create jobs included the following:
• Construction: Low carbon renovation of housing stock; Off-site construction of buildings; • Manufacture of “metals”; low carbon processes; Production of equipment for low carbon energy networks and vehicles; • Transport, storage and communications; sustainable logistics and rail freight; development/use of alternative fuels and associated infrastructure; • Environmental goods and services; continued establishment of metal waste and scrap sector; development of low carbon community energy companies/schemes; and • Manufacture of food and beverages; use of food waste for energy generation.
Barriers to the Low Carbon Economy in Sandwell
Low carbon procurement, the provision of low carbon education and planning to support the low carbon economy are all considered to be important public sector opportunities. However, there are a number of barriers that need to be overcome if these opportunities are to be maximised. Barriers are seen to include access to land, a lack of innovation (either via business or universities) within Sandwell and a lack of suitable skills161.
Sandwell MBC undertook a number of sector studies to identify priority sectors for development as part of the diversification of Sandwell’s economy. One of the sectors that was assessed was Green Technologies. The study concluded that there is significant scope for growth in the low carbon economy within the Borough, with an existing diverse manufacturing base making it ideally placed to expand and diversify into new low carbon products. The study concluded that:
• There is a need to increase awareness amongst businesses within Sandwell of the growing market opportunities within the green technologies sector, and the potential for diversification from traditional manufacturing markets; • Focus on training needs, including general business skills and specialist skills relating to green technologies; and • Identify suitable land/premises within the Borough.
150 Conclusion
There are many drivers of the low carbon economy, including legislation and the need to improve efficiency to reduce costs. There are significant opportunities within Sandwell, particularly within the construction and manufacturing sectors to diversify into new low carbon products and processes.
APPENDIX SEVEN
Sandwell Business Survey Topic Guide
10135 Sandwell Metropolitan Borough Council Business Survey 2010
Good morning/afternoon/evening. Could I please speak to ______? My name is ______and I am calling from M·E·L Research on behalf of Sandwell Metropolitan Borough Council.
We are conducting a survey about the local economy and business views affecting this. The results will be used to inform the future development of the council’s local economic assessment and improve the services and environment offered to existing and potential investors in Sandwell.
Could you spare us about 10 minutes to take part in this really important survey? (Take name and position at the end if delegated).
SECTION 1: ABOUT YOUR LOCATION
QA Firstly, can you tell me which business sector do you mainly operate in? PROMPT IF NECESSARY FROM ONE OR MORE OF THE SECTORS LISTED BELOW
Energy and Water ...... 1 Manufacturing ...... 2 Construction ...... 3 Distribution, Hotels and Restaurants ...... 4 Transport and Communications...... 5 Banking, Finance, Insurance etc...... 6 Public Administration, Education and Health...... 7 Retail ...... 8 Other (specify)...... 9 ......
151 Q1 Can I check whether your company is part of a larger Group? Yes ...... 1 No ...... 2
Q2 And is this your head office? Yes ...... 1 No (specify where) ...... 2 ......
Let’s talk just about your business operation in Sandwell. By Sandwell I mean the whole local authority area, which includes the urban areas of Tipton, Oldbury, West Bromwich, Wednesbury, Rowley Regis and Smethwick.
Q3 What are the main positive aspects of being located in Sandwell? DO NOT PROMPT. MULTICODE.
Lots of investment in the Borough ...... 1 Good transport links...... 2 Located near to Birmingham...... 3 Long tradition of business activity...... 4 A diverse range of businesses...... 5 Competitive accommodation costs ...... 6 No specific reasons...... 7 Other (specify below) ...... 8
......
Q4 Are there any negative aspects to being located in Sandwell?
......
Q5 Does your business have plans to relocate within Sandwell? SINGLE CODE
Yes ...... 1 No ...... 2
Q6 Does your business have plans to relocate outside Sandwell? SINGLE CODE
Yes ...... 1 No ...... 2
152 ASK IF Q5 OR Q6 = ‘YES’: Q7 What is your timescale for relocating? READ OUT. SINGLE CODE
1 year ...... 1 1 to 5 years ...... 2 5 to 10 years ...... 3 Other (specify)...... 4
SECTION 2: CAPITAL INVESTMENT
Now thinking about investment opportunities such as purchasing new machinery, technology, buildings and transport. INTERVIEWER NOTE: THIS EXCLUDES HUMAN CAPITAL (E.G. STAFF TRAINING)
Q8 Has your organisation invested at a site within Sandwell in the last 12 months? Yes ...... 1 ASK Q9 No ...... 2 SKIP TO Q10
Q9 If yes, please describe?
......
Q10 Over the next 12 months, in terms of capital investment at your Sandwell site(s), are you expecting to;? READ OUT. SINGLE CODE Expand ...... 1 Contract...... 2 Stay as you are ...... 3
IF Q10=1 or 2 ASK: Q10a Can you please give me some brief details about this?
......
SECTION 3: INNOVATION
Innovation can take a number of different forms including new products or services or ways of doing things.
153 Q11 Are you thinking of entering into any new product and/or service areas? Yes ...... 1 ASK Q12 No ...... 2 SKIP TO Q13
Q12 If yes, please describe briefly your plans?
......
Q13 Have you introduced any new ways of working in the last 12 months? Yes ...... 1 ASK Q14 No ...... 2 SKIP TO Q15
Q14 If yes, please describe?
......
Q15 Do you belong to any specialist business networks that help you keep up to date with emerging technologies or processes? . PROMPT IF NECESSARY: This can include either formal or informal networks that you access
Yes ...... 1 ASK Q16 No ...... 2 SKIP TO Q17
Q16 If yes, please describe?
......
SECTION 4: YOUR MARKETS
Sandwell companies sell in a wide variety of locations.
Q17 In your opinion, which of the following best describes the location of your customer base? READ OUT. SINGLE CODE.
154 INTERVIEWER: THINKING ABOUT WHERE THE MAJORITY OF YOUR CUSTOMERS ARE BASED
Sandwell...... 1 West Midlands area ...... 2 National ...... 3 International ...... 4 Not sure (DO NOT PROMPT)...... 5
Q18 Do you export any of your goods or services, either directly or via an agent, outside the UK? Yes ...... 1 ASK Q19 No ...... 2 SKIP TO Q20 Not applicable ...... 3 SKIP TO Q20
Q19 If yes, please could you tell me where? INTERVIEWER NOTE: IF COMPANY EXPORTS TO A HIGH NUMBER OF MARKETS THEN PLEASE SUMMARISE INTO REGIONS (E.G. THE FAR EAST) ......
Q20 Are you expecting to enter into any new markets in the next 12 months? INTERVIEWER: THINKING GEOGRAPHICALLY Yes ...... 1 ASK Q21 No ...... 2 SKIP TO Q22
Q21 If yes, which new markets do you intend to enter?
......
SECTION 5: YOUR SUPPLY CHAIN
I would now like to talk about the suppliers that your company currently uses
Q22 Would you say your suppliers are primarily based in…? INTERVIEWER: YOU CAN SELECT MORE THAN ONE OPTION IF THERE ARE MULTIPLE SUPPLIERS. READ OUT.
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Sandwell...... 1 West Midlands area ...... 2 National ...... 3 International (if selected, where?)...... 4 ...... Not applicable (DO NOT PROMPT) ...... 5
Q23 Does your main product or service go…?
Directly to the end consumer ...... 1 To another business within the supply chain...... 2
SECTION 6: YOUR WORKFORCE IN SANDWELL
Q24 Approximately, how many employees do you currently have located in Sandwell? WRITE IN. INTERVIEWER: THIS EXCLUDES SUB-CONTRACTORS Full Time
Part Time
Temporary staff
Despite raised levels of unemployment, a number of companies have reported delivery barriers relating to their workforce.
Q25 Over the past 12 months have you experienced any recruitment difficulties? READ OUT. SINGLE CODE Yes ...... 1 ASK Q26 No, recruitment was fine ...... 2 SKIP TO Q27 No, didn’t attempt any recruitment ...... 2 SKIP TO Q27
Q26 If yes, in your opinion why do you think this is?
......
Q27 Do you expect to experience skills shortages in the near future? This could be because of retirement or people leaving your business or new market innovations creating a need for new skills.
156 Yes ...... 1 ASK Q28 No ...... 2 SKIP TO Q29
Q28 If yes, in what areas of activity? e.g. tool making etc.
......
Q29 Do you see yourselves being in a position to offer structured in- house training to employees such as apprenticeships over the next two years? Yes ...... 1 No, because of economic conditions ...... 2 No, because of lack of interest ...... 3 No, not applicable for us ...... 4
Q30 Do you currently employ any graduates? Yes ...... 1 No ...... 2
Q31a Are you expecting to recruit any new staff in the next 12 months? Yes ...... 1 go to Q31b No ...... 2 go to Q32
Q31b And would this include recruiting any graduates? Yes...... 1 No ...... 2
And thinking overall…
Q32 In your opinion what do you feel the Council and its partners in regeneration could do more to support you?
......
SECTION 7: ABOUT YOUR BUSINESS
We’re at the end of the interview now. Can I just quickly check some factual details about your company please?
Q33 Company name (AS PER SAMPLE)
______
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Q34 Company address, including postcode (AS PER SAMPLE)
______
Q35 Which of the following best describes your company status? READ OUT. SINGLE CODE Sole trader...... 1 Partnership...... 2 Limited Partnership ...... 3 Limitied Liability Company ...... 4 Non Profit Making Unit ...... 5 Public Enterprise...... 6 Other (SPECIFY BELOW) ...... 7 Don’t know ...... 8
Q36 MOVED
Q37 How long has the company been located in Sandwell? WRITE IN Less than 12 months...... 1 1-2 years ...... 2 3-5 years ...... 3 6-10 years ...... 4 11-20 years ...... 5 21-30 years ...... 6 31-50 years ...... 7 51-99 years ...... 8 More than 100 years ...... 9
Q38 And what was your approximate turnover in your previous financial period? READ OUT. SINGLE CODE. INTERVIEWER: THINKING OF PRESENCE IN SANDWELL ONLY IF POSSIBLE
Below £50,000 ...... 1 £50,000-£249,999 ...... 2 £250,000-£999,999...... 3 £1,000,000-£9,999,999...... 4 £10,000,000 and over ...... 5
RECORD THE FOLLOWING RESPONDENT DETAILS: Contact Name………………. Position………………………. Phone………………………… Email…………………………..
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Thank you for your contribution to the future economic regeneration of Sandwell.
Q39 Would you like to be contacted regarding any support that the Council can offer your business in the future? If you agree, we will pass your details and answer back to the Council.
Yes ...... 1 No ...... 2
Thank you, that's all the questions!
I confirm that this interview was recorded with me in an appropriate manner and, to the best of my knowledge; the details have been recorded accurately.
Name of interviewer ______
APPENDIX EIGHT
Sandwell’s Overall Community Resilience Index Score Sandwell Overall Community Resilience Index Score 1.0 Economic Domain 1.0 Labour Market 1.0 Social Domain 0.9 Domain % of employment in 0.8 % of working 0.7 Residents gross 0.9 private sector, age population weekly pay knowledge intensive with no activities qualifications % of employment in 0.3 % of working 1.0 Difference between 0.1 public adminsitration age population resident and with NVQ level workplace weekly 4+ qualifications pay % of employment in 0.8 % of residents 1.0 % of residents 0.6 manufacturing employed in commuting out of knowledge district to work occulations Workplace-based 0.7 ILO 1.0 % of economically 0.8 gross weekly pay Unemployment inactive residents who want a job New business 0.9 Working age 1.0 % of working 1.0 registration employment population claiming rate DWP benefits GVA per head proxy 0.6 % of 0.6 Job density 0.6 Jobseekers Allowance claimants claiming for 12m Source AWM (2010b)162
159 160
REFERENCES
Section 1: Summary Sandwell’s Competitiveness
1 Department for Communities and Local Government (DCLG) (2010a), Statutory guidance on local economic assessment, London: DCLG Publications.
Section 2: Sandwell’s Functional Economic Geography
2 Sandwell MBC (2010), Sandwell Economic Prospectus, Oldbury: Sandwell MBC Publication 3 Black Country Local Authorities (2010), Black Country Core Strategy Publication Document. 4 Ibid. 5 Centre for Cities (2010), Centre for Cities outlook, London: Centre for Cities Publication. 6DCLG (2009), Local Economic Assessments: Consultation on draft statutory guidance, London: DCLG Publications. 7 DCLG (2010b), Function Economic Areas: An economic note. 8 Bryson, J.R. (2006), The functioning economic geography of the West Midlands, School of Geography, Earth and Environmental Sciences, University of Birmingham. 9 Centre for Local Economic Studies (CLES) (2009), Understanding the appropriate level of economic governance within the West Midlands, CLES and Localis, Birmingham: RegenWM. 10 Centre for Cities (2010), Centre for Cities outlook, London: Centre for Cities Publication. 11 Sandwell MBC (2010), Sandwell Economic Prospectus, Oldbury: Sandwell MBC Publication 12 Sandwell MBC (2010g) Sandwell Business Survey, Birmingham: MEL 13 Rice, P. & Venables, A.J. (2004), Spatial determinants of productivity: Analysis for the regions of Great Britain, CEP Discussion Paper 642. 14 Centre for Cities (2006), City leadership, giving city regions the power to grow, London: Centre for Cities. 15 Office for National Statistics (ONS) (2007), Travel to Work Areas (TTWAs) Names and Codes, [Accessed 8 September 2010: www.statistics.gov.uk]. 16 West Midlands Regional Observatory (WMRO) (2008), West Midlands Regional Economic Assessment Sandwell, 7 October 2008. 17 ONS (2010), Commute Annual Population Survey 2008 18 Ibid. 19 Howarth, S. (2010), WMRO Presentation on Functional Economic Geography, Mary Stevens Park, Dudley. 27 July. 20 West Midlands Regional Observatory (WMRO) (2010), Analysis of sub-regional dynamics in the West Midlands, Birmingham: WMRO. 21 Black Country Consortium (BCC) (2010), Travel to work areas data sheet, 2 November 22 Annual Population Survey (APS) (2008), A study of commuting patterns in Great Britain based on the APS http://www.neighbourhood.statistics.gov.uk/HTMLDocs/images/Commuting%20patterns%20b ased%20on%20Annual%20Population%20Survey%20data%202008_tcm97-90449.pdf [Accessed 26 July 2010] 23 West Midlands Regional Observatory (WMRO) (2010), Analysis of sub-regional dynamics in the West Midlands, Birmingham: WMRO. 24 Experian (2009), Defining the West Midlands functional geographies: Retail and leisure, Birmingham: WMRO/AWM. 25 Ibid. 26 Sandwell MBC (2008), Research facts, participation in higher education in Sandwell, Fact Sheet 01, Research Sandwell, Sandwell MBC. 27 Sandwell Primary Care Trust (2010), http://www.sandwell.nhs.uk/content.aspx?pageid=44 [Accessed: 1 July 2010]. 28 Sandwell Primary Care Trust (2010), Anecdotal Evidence 29 ECOTEC (2008), A strategic housing market assessment for C3 housing market area of the West Midlands, Final Report, Birmingham: ECOTEC.
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30 West Midlands Regional Observatory (WMRO) (2010), Analysis of sub-regional dynamics in the West Midlands, Birmingham: WMRO. 31 Sandwell MBC (2010), Sandwell Economic Prospectus, Oldbury: Sandwell MBC Publication 32 Black Country Consortium (BCC) (2010), Black Country Local Enterprise Partnership Submission to Government, July Draft, Dudley: BCC.
Section 3: Business and Enterprise
33 NESTA (2009), Business growth and innovation: The wider impact of rapidly-growing firms in the UK City Region, (G. Mason, K. Bishop & C. Robinson) National Endowment for Science, Technology and the Arts. 34 Black Country Consortium (2010b), The Black Country Business Barometer, June 35 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian 36 Black Country Consortium (2010b), The Black Country Business Barometer, June 37 Sandwell MBC (2010g) Sandwell Business Survey, Birmingham: MEL 38 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian 39 MINT database [Accessed 17 August 2010] 40 Ibid. 41 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian 42 MINT database [Accessed 17 August 2010] 43 Bryson, J.R. (2006), The functioning economic geography of the West Midlands, School of Geography, Earth and Environmental Sciences, University of Birmingham. 44 Experian (2010b) Experian study reveals explosion in the number of entrepreneurs in the UK, Press Release September, Nottingham: Experian. 45 AWM (2010) The Black Country Economy: Structure, performance & challenges, A presentation by Glyn Jones, 12 July, Birmingham: AWM. 46 NESTA (2009), Business growth and innovation: The wider impact of rapidly-growing firms in the UK City Region, (G. Mason, K. Bishop & C. Robinson) National Endowment for Science, Technology and the Arts. 47 Bryson, J.R. (2006), The functioning economic geography of the West Midlands, School of Geography, Earth and Environmental Sciences, University of Birmingham. 48 WMRO (2010a), The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1., Birmingham: WMRO. 49 Ibid. 50 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian 51 Scott Wilson (2010), Commercial & industrial waste & economic research study, Research carried out for Sandwell MBC November, Derby: Scott Wilson. 52 Scott Wilson (2010), Commercial & industrial waste & economic research study, Research carried out for Sandwell MBC November, Derby: Scott Wilson. 53 Black Country Consortium (2010b), The Black Country Business Barometer, June 54 Black Country Consortium (2010) Black Country Local Enterprise Partnership, Submission to Government Addendum, 19th November, Dudley. 55 Advantage West Midlands (AWM) (2010), The West Midlands regional economy, skills implications of the region’s ‘output gap’, Birmingham: AWM. 56 Scott Wilson (2010), Commercial & industrial waste & economic research study, Research carried out for Sandwell MBC November, Derby: Scott Wilson. 57 Ibid. 58 PriceWaterCoopers (PWC) (2010), Sectoral and regional impact of the fiscal squeeze: An economic analysis of the impact of spending cuts and tax rises, Public Sector Research Centre. 59 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian
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60 AWM (2010) The Black Country Economy: Structure, performance & challenges, A presentation by Glyn Jones, 12 July, Birmingham: AWM. 61 MINT database [Accessed 18 August 2010] 62 MINT database [Accessed 19 August 2010] 63 M&T (2010), Survey of existing membership and feasibility study for the expansion of the BID area for the next five year period, (July/August) Albion Bid Company, M&T Solutions Ltd. 64 Schumpeter, J. A. (1942), Capitalism, socialism and democracy, New York: Harper and Row 65 NESTA (2009), Business growth and innovation: The wider impact of rapidly-growing firms in the UK City Region, (G. Mason, K. Bishop & C. Robinson) National Endowment for Science, Technology and the Arts. 66 NESTA (2009), Business growth and innovation: The wider impact of rapidly-growing firms in the UK City Region, (G. Mason, K. Bishop & C. Robinson) National Endowment for Science, Technology and the Arts. 67 AWM (2010b), The West Midlands regional economy, skills implications of the region’s ‘output gap’, Birmingham: AWM. 68 WMRO (2009), West Midlands: Fit for the future, positioning the region for economic recovery, Birmingham: WMRO. 69 AWM (2010b), The West Midlands regional economy, skills implications of the region’s ‘output gap’, Birmingham: AWM. 70 Intellectual Property Office (IPO) (2010), IPO Fact and Figures 2008/9, April. 71 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian 72 Dudley MBC (2001), Analysis of exporters in the Black Country, Research and Information, Planning and Leisure Department, Dudley MBC. 73 Department for Business Innovation & Skills (2010), http://www.bis.gov.uk/policies/business-sectors/telecommunications/broadband 74 Sandwell MBC & BT (2010), Digital Sandwell, Stage 2 Action Plan, 31 March. 75 Forensic Pathways (2009), Crime affecting businesses in Sandwell, Tamworth: Forensic Pathways. 76 M&T (2010), Survey of existing membership and feasibility study for the expansion of the BID area for the next five year period, (July/August) Albion Bid Company, M&T Solutions Ltd. 77 Sandwell MBC (2010b) Green Space Strategy Executive Summary, 2010-2020, Sandwell MBC 78 Sandwell MBC (2009), Annual Monitoring Report, December, SMBC. 79 AECOM (2010), Black Country Environmental Infrastructure Guidance Phase 2, June. 80 M&T (2010), Survey of existing membership and feasibility study for the expansion of the BID area for the next five year period, (July/August) Albion Bid Company, M&T Solutions Ltd. 81 Sandwell MBC (2009), Annual Monitoring Report, December, SMBC. 82 Ibid. 83 Black Country Local Authorities (2010) Black Country Core Strategy, Further Proposed Changes, Part A, August. 84 AECOM (2010), Black Country Environmental Infrastructure Guidance Phase 2, June. 85 Local Data Company (2010) A gathering storm, Shop Vacancy Report, Mid-year 2010, (September), London. 86 Cambridge Econometrics (2010), Labour market profile for Sandwell, reproduced by AWM, November. 87 WMRO (2010b), The West Midlands economy post recession, key issues and challenges, Final Report, June, Birmingham: WMRO. 88 Cambridge Econometrics (2010), Labour market profile for Sandwell, reproduced by AWM, November. 89 Sandwell MBC (2010g) Sandwell Business Survey, carried out by MEL for Sandwell MBC November. 90 Ibid. 91 Audit Commission (2009) Regeneration worklessness: West Midlands Metropolitan Councils, October 92 The Guardian (2010), The public sector employment map of Britain, 16 November, http://www.guardian.co.uk/news/datablog/2010/nov/16/public-sector-employment-statistics- map-by-authority
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93 Ibid. 94 WMRO (2010a), The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1., Birmingham: WMRO. 95 PriceWaterCoopers (PWC) (2010), Sectoral and regional impact of the fiscal squeeze: An economic analysis of the impact of spending cuts and tax rises, Public Sector Research Centre. 96 AWM (2010) The Black Country Economy: Structure, performance & challenges, A presentation by Glyn Jones, 12 July, Birmingham: AWM. 97 Baker K (2010) ‘Increase in part-time work suggests long climb out of recession for workers’ Personnel Today 22 February 98 Ibid. 99 Region Action West Midlands (RAWM) (2009), The economic footprint, RAWM. 100 Sandwell MBC (2010), Sandwell Economic Prospectus, Oldbury: Sandwell MBC Publication 101 Ibid. 102 Ibid.
Section 4: People and Communities
103 Barnsby, G.S. (1980) Social Conditions in the Black Country 1800-1900, Wolverhampton: Integrated Publishing Services 104 West Midlands Industrial Development Association (1955) Industry in the West Midlands 1955 edition, The Official Handbook, Cheltenham & London: J. Burrows & Co. Ltd. 105 Sandwell MBC (2010d) Guru Nanak Sikh Temple http://www.laws.sandwell.gov.uk/ccm/navigation/leisure-and-culture/local-history-and- heritage/heritage-trail/walk-smethwick/guru-nanak-sikh-temple/ [Accessed 19 November 2010] 106 Office for National Statistics (ONS) (2010) Mid-year population estimates: NOMIS Residential Population, 2 July. 107 Demographia (2010) http://www.demographia.com/db-englad.htm, [Accessed 20 July 2010] 108 ONS (2010) Mid-year population estimates: NOMIS Residential Population, 2 July 109 Green, A. (2007) The economic impact of migrant workers in the West Midlands, November, Birmingham: WMRO 110 WMRO (2010a) The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1. 111 ONS (2010) 2008-based Sub National Population Projection, Table 5: All local authorities and higher administrative areas. 112 Ibid. 113 WMRO (2010b) Worklessness in the West Midlands: The impact of demographic and multiple risk factors, Research Report July: Birmingham 114 Ibid. 115 ONS (2010) Claimant count with rates and proportions 116 WMRO (2010a) The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1. 117 Sandwell MBC (2010c) Sandwell Interim 16-19 Commissioning Statement 2010-11, final draft 118 Ibid. 119 Black, Dame Carol (2008) Review of the Health of Britain’s Working Age Population: Working for a healthier tomorrow, 17 March, London: TSO. 120 Sandwell PCT (2009), Public Health Annual Report 2008/09, Sandwell MBC & Sandwell Partnership. 121 WMRO (2010a) The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1. 122 APHO (2010), Sandwell Health Profile, Updated 28 July 2010 [Accessed 22 November 2010 www.healthprofiles.info] 123 Carter S. & Coleman L. (2006) ‘Planned’ teenage pregnancy: Views and experiences of young people from poor and disadvantaged backgrounds, York: JRF.
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124 Research Sandwell (2010), NI 116 – Proportion of children in poverty, 11 November, Sandwell MBC. 125 Ibid. 126 MEL (2010), Reducing debt and helping the local economy, a presentation by Mick Feloy 19 October. 127 Ibid. 128 DCLG (2007) The English Indices of Deprivation 2007, Wetherby: Communities and Local Government Publications. 129 WMRO (2010a) The State of the West Midlands Annual Synthesis Report 2010 (September) Draft 1.1. 130 Research Sandwell (2010) Analysis of Black Country Connexions Data (2007-2009) 131 Sandwell Partnership (2007) Sandwell Employment and Skills Floor Target Action Plan Version 1.4 (Post Consultation) 2 March Prepared by Regeneration & Partnerships Unit, Sandwell MBC and Research Sandwell, Sandwell MBC 132 Neighbourhood Employment and Skills Plans [Available on http://www.sandwelltrends.info/themedpages/NESP26]
Section 5: Sustainable Economic Growth
133 Atkins (2010), Opportunities in the Low Carbon Economy, Sandwell, May 2010 134 Ibid. 135 Sandwell MBC (2010d) Information from Sandwell MBC Sustainability Team, 8 February. 136 Atkins (2010), Opportunities in the Low Carbon Economy, Sandwell, May 2010 137 DEFRA (2010) The path towards a zero waste economy – waste review launched, Press Release, 29 July [Accessed 5 August 2010 http://ww2.defra.gov.uk/2010/07/29/waste-news/] 138 Sandwell MBC (2010e) Waste Improvement Plan, Press release, 12th August. 139 Scott Wilson (2010), Commercial and Industrial Waste and Economic Research Study (Final Report, Draft). Scott Wilson, April 2010. 140 AWM (2009) The Regional Approach to Landfill Diversion Infrastructure, Main Report. 141 AWM (2010) Environmental Technologies Cluster Plan, 2008-2011 142 MINT database [Accessed 10 August 2010] 143 WMRO (2008) West Midlands Regional Economic Assessment Sandwell, West Midlands Regional Observatory, 7 October 144 Sandwell MBC (2010g) Sandwell Business Survey, Birmingham: MEL 145 Select Committee on Public Transportation (2009), Bus Coverage in relation to evening, Sunday and low coverage areas in Sandwell 14th October 146 Centro et al (2009), West Midlands Local Transport Plan 3 Vision and Issues Consultation, September. 147 Sandwell MBC (2009b) Housing Stock Condition Survey 148 Ibid. 149 Sandwell MBC (2010h) Sandwell Housing Needs and Demand Study 2010 150 Sandwell MBC (2010f) Spatial Planning Division, 11 November 151 Birmingham & Black Country Wildlife Trust (2010) Consultation Comments, December 152 Sandwell MBC (2007), The Sandwell Tourism Plan, 2007-2011. 153 Sandwell MBC et al (2009), Black Country Core Strategy Publication Document, November. 154 Ibid.
Section 6: Economic Resilience
155 AWM (2010b) Community Economic Resilience Index, Strategy Team, Birmingham: AWM. 156Experian (2010a), Understanding resilience: Background information – West Midlands, Experian. 157 AWM (2010b) Community Economic Resilience Index, Strategy Team, Birmingham: AWM 158 Experian (2010a), Understanding resilience: Background information – West Midlands, Experian.
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Appendix
159 Atkins (2010), Opportunities in the Low Carbon Economy, Sandwell, May 2010 160 Ibid. 161 Ibid. 162 AWM (2010b) Community Economic Resilience Index, Strategy Team, Birmingham: AWM
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LEA CONSULTEES
A4e Advantage West Midlands Albion Business Improvement District Co Ltd. Bangladeshi Women’s Association Birmingham and Black Country Biodiversity Partnership Birmingham CC Black Country Chamber of Commerce Black Country Consortium Black Country Observatory British Telecom Business Link West Midlands Coventry University Enterprises Ltd Dudley MBC Government Office for the West Midlands Greets Green Community Enterprise Hadley Industries Holdings Ltd Homes and Communities Agency Jobcentre Plus Landau Metal Assemblies Ltd Metalforming Centre Nachural Prospects Sandwell Chamber of Commerce Sandwell Children and Young People Partnership Sandwell College Sandwell Council of Voluntary Organisations Sandwell Environment Partnership Sandwell Health and Wellbeing Partnership Sandwell Housing Forum Sandwell MBC Sandwell Members with specific interest in the LEA Sandwell Partnership Sandwell Primary Care Trust Sandwell Primary Care Trust Sandwell Traders Association Sandwell Women’s Enterprise Development Agency (SWEDA) Seetec Skills and Economic Regeneration Partnership Skills Funding Agency Smethwick Youth and Community Centre Success Train Ltd The Federation of Small Businesses Walsall MBC West Midlands Manufacturing Advisory Service West Midlands Probation Service Wolverhampton CC
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FURTHER INFORMATION
LOCAL ECONOMIC ASSESSMENT FOR THE BLACK COUNTRY BOROUGH OF SANDWELL
Prepared by:
Policy and Strategy Unit Economic Regeneration and Skills Sandwell MBC
Contacts
Andy Bywater [General Enquiries] Policy and Strategy Unit Manager Economic Regeneration and Skills Email: [email protected]
Jane Cole [Section 5: Sustainable Economic Growth] Principal Policy Officer Email: [email protected]
Marcus Whiting [Section 4: People and Communities] Senior Economic Intelligence Officer Email: [email protected]
Sandwell Council House PO Box 2374 Freeth Street Oldbury B69 3DE
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