greater birmingham and solihull local ......2018/09/13 · greater birmingham and solihull local...

GREATER BIRMINGHAM AND SOLIHULL LOCAL ENTERPRISE PARTNERSHIP

BOARD MEETING

Thursday 13th September

LEP Board meeting – 9.00am-12.00pm

Location: Hilton at St George’s Park National Football Centre Needwood DE13 9PD

AGENDA

Item Time Owner Subject Pre Read Presenter Purpose of the Report

1 9.00 Chair

Welcome and Apologies N/A Tim Pile

To note attendance and apologies

2 9.05 LEP Executive Notes / Matters Arising – 5th June

Attached Tim Pile To agree notes of the last meeting and any matters arising

3 9.10 LEP Board Review of Agreed Actions Attached Tim Pile To note progress against agreed actions

4 9.15 LEP Executive Forward Plan Attached Tim Pile To agree Forward Plan

5 9.18 LEP Executive Director’s Report Attached Katie Trout To note focus of the Executive team and progress against KPIs

6 9.25 Programme Delivery Board

Growth Programme Update Attached Roger Mendonça To provide an update on the Growth Progammes

7 9.40 LEP Board Centre for Clinical Haematology presentation

Verbal Professor Charlie Craddock To provide an update on the Centre for Clinical Haematology

8 9.50 WMCA SEP Board

Local Industrial Strategy Attached Paul Edwards To discuss the emerging Local Industrial Strategy, its implications for GBSLEP and any next steps

9 10.05 Pillar Board SEP Delivery Plans – Life Sciences and Advanced Manufacturing

Attached Paul Edwards To update on progress against the Life Sciences and Advanced Manufacturing Delivery Plans

10 10.15 LEP Board Regional Energy Strategy Attached Matthew Rhodes To update the Board on progress in developing a Regional Energy Strategy and seek the Board’s endorsement

2

Item Time Owner Subject Pre Read Presenter Purpose of the Report

before submitting a final version to the WMCA Board.

11 10.25 WM Growth Company

West Midlands Growth Company FDI Update

Attached Nicola Hewitt To update on the FDI Performance for the region

12 10.35 LEP Board LEP Review Attached Michelle Nutt (BEIS)/ Katie Trout To discuss the LEP Review and implications for GBSLEP

13 10.55 LEP Board Future Operating Model Attached Katie Trout To note the Future Operating Model

14 11.00 LEP Board Annual Conference Update Attached Paul Edwards To update on the upcoming GBSLEP Annual Conference

15 11.05 LEP Board Medium Term Financial Plan

Attached Roger Mendonça To note the Medium Term Financial Plan

16 11.10 West Midlands Combined Authority

Health & Wellbeing and Economic Growth Update

Attached Cllr Bob Sleigh To provide an update on wellbeing in the region and impact on economic growth

17 11.15 Break

18 11.20 LEP Board Enterprise Zone Verbal Roger Mendonça/ Clive Heaphy To update on EZ governance and monitoring arrangements

19 12.00 AOB N/A

Item 2

1

GREATER BIRMINGHAM AND SOLIHULL LOCAL ENTERPRISE PARTNERSHIP BOARD MEETING

Thursday, 19th July

Birmingham Hippodrome Theatre, Hurst Street, Southside, Birmingham B5 4TB

DECISIONS & ACTIONS

Present In Attendance Apologies Tim Pile Chair Paul Edwards LEP Executive Cllr Bob Sleigh Solihull MBC Chris Loughran Deputy Chair Peter Jenion LEP Executive Cllr Mike Wilcox Lichfield DC Mike Lyons HS2 Ltd. Philippa Whitelock LEP Executive Sophie Drake Story Comms Pat Hanlon Andrew Barratt Tamworth BC Matthew Rhodes Energy Capital Anita Bhalla Performance Birmingham John Callaghan Solihull College Saqib Bhatti Younis Bhatti & Co. Simon Marks Arcadis Tom Marlow West Midlands Growth Co. Cllr Steve Claymore Tamworth BC Mike Hopkins Clive Heaphy

South & City College Birmingham CC

Rachel Westwood Solihull MBC Professor Sir David Eastwood

University of Birmingham

Mark Smith Aston University Cllr Ian Hardiman Wyre Forest Roger Mendonça LEP Executive Cllr David Bush Redditch Cllr Ian Courts Solihull MBC Cllr Gordon Alcott Cannock Chase DC Cllr Patricia Ackroyd East Staffs BC Cllr Ian Ward Birmingham CC Cllr Daniel Cook Tamworth BC

Item 2

2

Decision

Action

Timescale

Owner

1 Welcome and Apologies

The Chair, Tim Pile thanked the Hippodrome Theatre for hosting the Board and welcomed all present. Fiona Allan, Chief Executive of the Hippodrome, welcomed the Board and gave an introduction into the Hippodrome and overview of their upcoming priorities and activities. The Chair welcomed John Callaghan from Solihull College, who will replace Mike Hopkins on the Board as the further education representative from 1st August 2018. The Chair noted apologies from:

• Cllr Bob Sleigh, Solihull MBC (Cllr Ian Courts as substitute)

• Cllr Mike Wilcox, Lichfield DC • Sophie Drake, Story Comms • Matthew Rhodes, Energy Capital • Saqib Bhatti, Younis Bhatti & Co. • Cllr Steve Claymore, Tamworth BC (Cllr

Daniel Cook as substitute) • Professor Sir David Eastwood (Mark Smith as

substitute) • Cllr Ian Hardiman, Wyre Forest • Cllr David Bush, Redditch

2 Notes / Matters Arising from the last meeting – 21st March 2018

The Board agreed the Decisions and Actions Note from the last Board meeting in June. The Board requested that attendance lists be published on all Decisions and Actions notes

LEP Executive to include full list of Attendance in all

Ongoing

LEP Board

Item 2

3

The Board agreed that comprehensive project reviews should be undertaken, once a project has been completed, to evaluate the extent to which the project has met its objectives.

Decisions and Actions notes LEP Executive to ensure project reviews are carried out upon completion of each project.

Ongoing

LEP Programme Delivery Board

3 Review of Agreed Actions

Cllr Ian Ward provided an update on the progress in organising the Commonwealth Games. He updated on appointments to the Birmingham Organising Committee for the 2022 Commonwealth Games and gave a brief overview of the status of some of the capital projects for the Games. Anita Bhalla provided an update on the recent Channel 4 visit to the West Midlands with a view to their potential relocation.

4 Board Forward Plan

The Board noted that Waheed Nazir would be attending the Board in September to update on the Enterprise Zone. The Chair encouraged more updates from individual projects potentially post-completion. The Chair encouraged Directors to suggest particular projects that they would like to see present to the Board

Waheed Nazir to present an update to Board in September. Roger Mendonca/ Clive Heaphy to bring report to the Board. LEP Executive to invite representatives from one project to present at each Board meeting Board Directors to suggest projects and items to LEP Executive to be included on the Forward Plan

September Board Ongoing Ongoing

EZ Board LEP Board LEP Board

Item 2

4

5 Director’s Report The Board:

• noted the Director’s strategic update and the

progress made against KPIs; • noted that Mike Hopkins will be stepping

down as the Further Education representative to the Board and will be replaced by John Callaghan;

• approved the extension of Saqib Bhatti, Pat Hanlon and Simon Marks’ terms of office as LEP Board Directors to the end of the calendar year; and

• noted the continued lack of clarity around the date of the LEP Review publication.

6 Growth Programme Update

The Board:

• noted the current approach to strategic pipeline development;

• noted the update on the Friarsgate Town Centre Regeneration project; and

• considered the Growth Programme Investment Report for the University Station Interchange project.

Pete Brunskill and Louise Linton, from West Midlands Rail Executive, presented an update on the plans for the University Station Interchange Project. The Board approved the conditional allocation of £10,000,000 (ten million pounds) of Local Growth Fund (LGF) grant funding to West Midlands Rail Executive for the delivery of the University Station Interchange project, subject to Full Business Case. This is in accordance with the LEP Assurance

Item 2

5

Framework following the submission of the Outline Business Case and its Independent Technical Evaluation.

The Board approved the drawdown of £2,000,000 of the conditional funding allocation by West Midlands Rail Executive as Project Development Funding to enable the project to advance to Full Business Case stage. The Board agreed that the conditional approval should be subject to further consideration of the outline business case by the Programme Delivery Board in September. The Board agreed that the conditional allocation should be reviewed in April 2019 to check the project’s progress with securing match funding and that delivery timescales still align with the LEP’s funding programme which concludes in 2021. The Board provided comments on the development of the project and decided that there should be a further update at the Programme Delivery Board in September.

Chris Loughran and Mike Lyons to meet with the University Station team to discuss outstanding issues. West Midlands Rail Executive to provide update on University Station Interchange project for the Programme Delivery Board in September

September By 6th September

University Station team/ Chris Loughran/ Mike Lyons West Midlands Rail Executive/ GBS LEP Programme Delivery Board

7 Prince’s Trust Update

Humraaj Singh and Michele Farmer, from the Prince’s Trust, presented an update on the progress of the Prince’s Trust Skills and Enterprise Hub at the Cold Store in Digbeth, part-funded by the LEP.

Item 2

6

8 European Structural and Investment Funds

The Board noted the progress made though ESIF to date. The Board requested another update on ESIF in January

Cllr Court to update at January Board

January Board

LEP Board/ Cllr Courts

9 SEP Delivery Plans – Skills

The Board noted progress made against interventions set out in the Delivery Plan for Skills, as approved at LEP Board in February 2018.

The Board agreed that improvements should be made in presentation of Delivery Plans at future Board meetings.

Board Directors commented and made suggestions for improving skills delivery.

LEP Executive to refine presentation of delivery plans to be reflected at future Board meetings

Mike Hopkins to meet with Paul Edwards to discuss the challenges for schools and colleges, including messaging around apprenticeships and support for SMEs

LEP Executive to explore possibility of placing conditions, for skills and training development, on capital projects that the

Ongoing

September

September

LEP Executive

Mike Hopkins/Paul Edwards

LEP Executive

Item 2

7

LEP is funding

LEP Executive to explore whether there is scope to fund capital projects, in schools, directly linked to skills that are relevant to industry.

September

LEP Executive

10 Local Industrial Strategy

Paul Edwards presented an update on the Local Industrial Strategy for the West Midlands.

11 Stakeholder Engagement Plan

The Board commented on and endorsed proposed future Stakeholder Engagement Plan for the LEP

LEP Executive to bring an update of the Stakeholder Engagement Plan to the November Board meeting

November Board LEP Executive

12 Growth Hub Next Phase

The Board endorsed the recommendation of the Business & Innovation Pillar Board that an ‘Enhanced Partnership’ model be pursued for the next phase of Growth Hub delivery as the basis for an ERDF extension bid for the period 2019-2022. Board Directors commented on the direction of the Growth Hub Next Phase and made the following suggestions:

• LEP should explore benchmarking with best practice examples from other LEPs;

• LEP to identify simple measures to track progress;

• LEP to explore opportunities to communicate

LEP Executive to explore these suggestions and build them into the design of the Growth Hub Next Phase, as appropriate.

November

LEP Executive

Item 2

8

success stories and publicise the Growth Hub service more widely.

13 GBSLEP Operating Budget 2018+

The Board:

• Noted 2017/18 year-end outturn of the GBSLEP Executive’s operating expenditure (£2.2m) and the carry forward position for income funds/reserves (£3.4m);

• Noted the proposed 2018/19 budgeted

income (£4.0m) and expenditure (£4.1m) and the forecast carry-forward position for income funds/reserves (£3.2m);

• Approved the proposed operating budget for

2018/19; and

• Noted the 2018/19 quarter 1 actual expenditure (£0.5m) position, and the comparison to Budget for the period (£0.5m).

14 Paradise Update Rob Groves, Argent LLP, presented an overview of the Paradise development progress.

15 Paradise Update Clive Heaphy gave an update on progress from the perspective of Birmingham City Council perspective.

16 EZ Governance and Monitoring Arrangements

The Board approved the integration of the Enterprise Zone (EZ) programme management, monitoring and performance arrangements with wider LEP programme management arrangements, including introducing £10m and £2.5m delegations for the Programme Delivery Board (PDB) and LEP Director respectively.

Item 2

9

17 AOB The Chair thanked Mike Hopkins, as he stepped down as Board Director, for his contribution towards the work of Greater Birmingham and Solihull LEP. The Chair requested a short paper to be distributed to Board Directors about the Annual Conference.

LEP Executive to distribute short paper updating on the Annual Conference to Board Directors

27th July 2018

LEP Executive

FUTURE LEP BOARD MEETING DATES:

• Thursday 13th September 2018, 9:30 – 12:00 (Club England Suite, St George’s Park Newborough Road, Needwood, Burton upon Trent DE13 9PD)

• Thursday 22nd November 2018, 9:30 – 12:00 (Trowers & Hamlins LLP, 10 Colmore Row, Birmingham, B3 2QD)

Item 3

ACTIONS LOG

The Actions Log is a record of actions agreed upon to support Board decisions. It provides an indication of the progress made against each action.

Board Date Agenda Item Number

Action Agreed Owner(s) Date due for completion

Status Date Completed

Progress update

01/02/2018 12.2 LEP Director, Head of Strategy and Head of Delivery to complete the “Appointment of Bankers” form

LEP Director /Heads of Strategy & Delivery

21st February

On hold This is on hiatus pending the outcome of the LEP Review and the LEP’s future operating model.

21/03/2018 3 West Midlands Growth Company to bring their Inward Investment Strategy to the June Board.

West Midlands Growth Company

5th June ongoing

21/03/2018 6.2 Cllr Bob Sleigh to update Board on Wellbeing in September

Cllr Bob Sleigh

13th September

Complete Cllr Bob Sleigh will provide update on Wellbeing at September Board, completing the action.

21/03/2018 8.2 LEP Executive to produce short briefing paper outlining how the

LEP Executive

5th June Ongoing LEP Executive is mapping out funding sources for different sectors

Item 3

research funding is changing across the different sectors.

05/06/2018 8 LEP Executive to increase focus on exports in Delivery Plans and hold bodies such as DIT to account regarding their work supporting exports in the GBSLEP area

LEP Executive

Ongoing Ongoing Initial discussion held with DIT and new ESIF application made by DIT aimed at increasing provision. Executive team is considering other potential interventions.

DIT will bring an update on their work supporting exports to November Board.

19/07/2018 2 LEP Executive to include full list of Attendance in all Decisions and Actions notes.

LEP Executive

Ongoing Complete 13/09/2018 Draft Decisions and Actions note now includes full list of attendance, which will be updated for each Board meeting.

19/07/2018 4 Waheed Nazir to present an update to Board in September. Roger Mendonca/ Clive Heaphy to bring report to the Board.

September Board

Complete 13/09/2018 Update at September Board to complete action.

19/07/2018 4 LEP Executive to invite representatives from one project to present at each

LEP Executive

Ongoing Ongoing Professor Charlie Craddock to present verbal update about the Centre for Clinical Haematology at the September Board.

Item 3

Board meeting

19/07/2018 2 LEP Executive to ensure project reviews are carried out upon completion of each project.

LEP Programme Delivery Board

Ongoing Closed The production of Project Completion Reports is integrated within the stage gateway process for the programme. All appropriate completed projects that hadn’t previously completed the reports have been contacted to inform them of the requirement.

19/07/2018 6 Chris Loughran and Mike Lyons to meet with the University Station team to discuss outstanding issues with the University Station Project.

University Station team/ Chris Loughran/Mike Lyons

September Complete 24/07/2018

19/07/2018 6 West Midlands Rail Executive to provide update on University Station Interchange project for the Programme Delivery Board in September

West Midlands Rail Executive/GBS LEP Programme Delivery Board

6th September

Complete 06/09/2018

Item 3

19/07/2018 8 Cllr Court to update on ESIF at January Board

LEP Board/Cllr Courts

January Board

Ongoing Cllr Court update on ESIF scheduled on Forward Plan for January

19/07/2018 9 LEP Executive to refine presentation of SEP Delivery Plans to be reflected at future Board meetings

LEP Executive

Ongoing Complete 13/09/2018 Delivery Plans to be presented in new format at September and future board meetings, completing the action.

19/07/2018 9 Mike Hopkins to meet with Paul Edwards to discuss the challenges for schools and colleges, including messaging around apprenticeships and support for SMEs

Mike Hopkins/ Paul Edwards

September Ongoing 28/09/2018 Mike Hopkins and Paul Edwards scheduled to meet on the 28th September to complete the action.

19/07/2018 9 LEP Executive to explore possibility of placing conditions, for skills and training development, on capital projects that the LEP is funding

LEP Executive

September Ongoing This is already part of a request to sign up to the Birmingham Business Charter. LEP Executive exploring any other specific conditions we want to integrate.

19/07/2018 9 LEP Executive to explore whether there is scope to fund capital projects in

LEP Executive

September Mike Hopkins and Paul Edwards scheduled to meet on the 28th September to complete the

Item 3

schools directly linked to skills that are relevant to industry.

action.

19/07/2018 11 LEP Executive to bring an update of the Stakeholder Engagement Plan to the November Board meeting

LEP Executive

November Board

Ongoing Update on the Stakeholder Engagement Plan scheduled for the Board in November.

19/07/2018 12 LEP Executive to explore suggestions from Board Directors and build them into the design of the Growth Hub Next Phase, as appropriate.

LEP Executive

November Ongoing

19/07/2018 17 LEP Executive to distribute short paper updating on the Annual Conference to Board Directors

LEP Executive

27th July 2018

Complete 13/09/2018 Annual Conference Board Update completes the action

GBSLEP Board Forward Plan Item 4a

Item Purpose Owner Lead officer Standing item/Regular item/ Ad hoc item

Supervisory Board

Thursday 22 November

Director’s Report To raise and discuss headline business on the agenda, and to note performance against KPIs

LEP Director Katie Trout Standing item

Growth Programme To update on Growth Programme progress and to approve the Interim Full Business Case for the Digbeth High Street Public Realm Enhancement project.

Programme Delivery Board

Tom Fletcher Standing item Yes

Local Industrial Strategy To discuss the emerging Local Industrial Strategy, its implications for GBSLEP and any next steps

WMCA SEP Board Paul Edwards Standing item

SEP Delivery Plans To review Delivery Plans Pillar Boards Paul Edwards Standing item

Annual Review To reflect on the AGM and the past year LEP Board Katie Trout Ad hoc item Yes

Department for International Trade Update

To update on how DIT is working with GBSLEP to promote exports

LEP Board Mick Carling/ Simon Hall

Ad Hoc


Stakeholder Engagement Plan

To update on the Stakeholder Engagement Plan

LEP Board Paul Edwards Ad Hoc

Growth Hub Business Plan 2019-22

To seek Board approval for the Growth Hub Business Plan 2019-2022 which will form the basis for an ERDF extension bid

Business & Innovation Pillar Board

Paul Edwards Ad Hoc No

Paradise and EZ Investment Plan

To approve the Paradise and EZ Investment Plan

LEP Board Roger Mendonça Ad Hoc

LEP Review Update To update on the LEP Review LEP Board Katie Trout Ad Hoc

Governance Review To consult the Board on the findings of the Governance Review

LEP Board Nick Glover Ad Hoc

Thursday 24 January 2019



Growth Programme To update on Growth Programme progress and to approve the Full Business Case for the Curzon Station




Enhanced Public Realm project.



SEP Delivery Plans To review and endorse the Delivery Plans

Pillar Boards Paul Edwards Standing item

Enterprise Zone Investment Plan

To note the progress of and agree any amendments to the Enterprise Zone Investment Plan

Programmed Delivery Board

TBC Regular (quarterly) Yes

Annual Conversation Review To review outcomes of the Annual Conversation

LEP Board Katie Trout Ad Hoc

Thursday 21 March 2019



Growth Programme To update on Growth Programme progress








Business Plan 2019/2020 To update on the Business Plan for 2019/2020

LEP Board Katie Trout Standing item (annual)

Thursday 6 June 2019










GBSLEP Operating Budget 2018+

To approve the GBSLEP Operating Budget for 2019/20 and 2020/21

LEP Board Nick Glover Regular item (annual)

Yes

Enterprise Zone Investment Plan

To note the progress of and agree any amendments to the Enterprise Zone Investment Plan

Programmed Delivery Board

TBC Regular (quarterly) Yes


Thursday 18 July 2019





Tom Fletcher Standing item





Item 5

05/09/2018 1 of 2

GREATER BIRMINGHAM AND SOLIHULL LEP BOARD MEETING

13 September 2018

Director’s Report

Recommendations Board Directors are asked to:

1. Note the Director’s update on the strategy and activity of the LEP, including an update on KPIs.

Strategic Update

2. The main issue on today’s Board agenda is the response to the LEP Review. Two of Government’s national policy objectives appear mutually exclusive in a GBSLEP context (functional economic geographies and the removal of overlaps) and Board Directors will need to take a view on how best to square this circle. Michelle Nutt from BEIS will be joining us to aid the discussion.

3. We also need to consider our future operating model so that we are best placed to deliver our SEP, contribute to the Local Industrial Strategy and meet the requirements of the LEP Review.

Programme Delivery

4. Delivery is the LEP’s priority and there are progress updates on two of the Delivery Plans plus a presentation from Professor Charlie Craddock on the Centre for Clinical Haematology, part-funded by GBSLEP.

5. The programme continues to perform strongly and GBSLEP’s provisional offer of financial support was crucial to the West Midlands securing around £150m of public and private sector funding to develop a 5G network for the region. A detailed funding proposal will now be developed in partnership with the WMCA.

6. Board Directors will be aware of the disappointing news that the Friarsgate project in Lichfield will not be proceeding as originally planned. GBSLEP is committed to helping the Council develop and deliver alternative proposals and funding has been earmarked for that purpose.

Channel 4

7. Work on the Channel 4 bid continues apace, and again the LEP is playing an instrumental role in the development and delivery of Birmingham’s offer.

Commonwealth Games

Item 5

05/09/2018 2 of 2

8. Work on the Commonwealth Games is also gaining momentum and brief update of

the latest developments will be provided at the meeting.

Foreign Direct Investment

9. Nicola Hewitt from the Growth Company will be joining us for an update on FDI performance in the GBSLEP area. With Brexit looming large, and the uncertainty around Brexit already a factor, how to maintain and improve our ability to attract external end occupiers will be a key ongoing issue for the LEP.

KPIs

10. The latest KPI data is attached. This shows a small increase in the claimant count (number of claimants divided by economically active 16+ population) for GBSLEP which is not reflected elsewhere in the country. Latest figures in July show the rate is 0.1% higher than in June. This follows a general upwards trend, increasing from 4% in January, to 4.9% in July. The increase can be explained by the rollout of Universal Credit in Birmingham from November 2017, which requires a broader range of people to look for work than before.

Conclusion

11. Finally, I would like to take this opportunity to give a huge thank you to Roger for leading the LEP Executive over the past year. He has done a fantastic job and has really helped to move our agenda forward during that time, further supporting the development of the Executive in the process. Thankfully he is not going too far and will hopefully continue to work with us in his West Midlands Growth Company role.

12. After an amazing (and very tiring!) year on maternity leave, I am looking forward to catching up with you all over the coming weeks and supporting the Board and the Executive to deliver our SEP.

Report by: Katie Trout LEP Director

Contact: [email protected]

Date Created: 04/09/2018

September 2018

GBSLEP KPI Report

1

KPI Baseline (2010)

Current Progress

To Date Latest Data

Create 250,000 Private Sector Jobs by 2030 to be the Leading Core City LEP for

Private Sector Job Creation

633,600 767,800 (2016)

134,200

54% Delivered 22,600

Increase GVA by £29bn by 2030

£40.4bn £46.8bn (2016)

£6.4bn 15.8% Deliv-

ered £1.3bn

Decrease Unemployment to the National Average by 2020

2.7% Point Gap with UK

1.6% Point Gap with UK

(March 2018)

1.1% Points

41% Delivered

No Change

To Have the Lowest Unemployment Amongst the LEP Core Cities by 2030

5.1% Point Gap with

Leading CC

2.1% Point Gap with

Leading CC (West

of England)

(December 2017)

3% Points

59% Delivered

-0.1% Points

GBSLEP to be the Leading Core City LEP by 2030 for GVA per Head

£7,123 Per Head Gap

£6,126 Per Head Gap

(2016)

£997 Per Head

14% Delivered

£242 Per Head gap

Increase the % of Working Age Population with NVQ3+ to the National Average by 2025

5.6% Point Gap with

UK

6.6% Point Gap with

UK (Sept 2016)

+1.0%

Point

+1.0% Point

New KPIs - Baselined from 2015

Increase Productivity Rates to the National Average by 2030

-£3.88 GVA per Hour Gap

(2015 data)

£3.73 GVA per Hour Gap

(2016)

-0.15

-3.9%

£0.2 Per Hour

GBSLEP to be the Leading Core City LEP for Quality of Life by 2030

-Ranked 5/8

(2013-15)

Ranked 4/8

(2014-16)

Up 1 Place

Up 1 Place

KPI Dashboard

GBSLEP KPI Report September 2018

KPI Baseline (2010)

Current Progress

To Date Latest Data

Labour Market Indicators

Claimant Unemployment (June 2018)

67,260 47,750 -19,510 +910

WM Employment (June 2018) 2,489,000 2,679,000 +190,000 +12,000

WM Emp. Rate (June 2018) 69.0% 74.9% +5.9% +0.3%

WM Unemployment (June 2018) 243,700 132,000 -111,700 -7000

WM Unemployment Rate (June 2018) 8.9% 4.7% -4.2% -0.3%

% Business 10%+ Employ-ment Growth in 3 Consec-utive Years (2014-17)

24% 16% -8% -2.3%

FDI Jobs Created (2017/18) 764 3138 2,374 +1428

Economic Output Indicators

Private Sector Business Start-ups (2014-17)

5,021 13,595 +8,574 +4,417

Business Start-up Rate per 10,000 of Pop (2014-17)

26.0 67.4 +41.4 +21.4

Start-up 3 Year Survival Rate (2014-17)

48.4% 54.5% +6.1% +2.9%

% Start-ups Reaching £1m+ Turnover After 3 Years (2014-17)

5.8% 4.0% -1.8% -0.8%

QBR - Domestic Sales In-dex (Q1 2018)

66 66 No

change -3

QBR - Export Sales Index 63 61 -2 No change

West Midlands Exports (goods only) (Q4 2017)

£4.1bn £8.9bn +£4.8bn +£1bn

West Midlands PMI Busi-ness Activity Index

56.0

54.6

-1.4 -2.6

Leading Indicators Dashboard

GBSLEP KPI Report September 2018

KPI Baseline (2010)

Current Progress

To Date Latest Data

Labour Market Indicators

Claimant Unemployment Rate Differential (June 2018)

+2.6% point

gap (with UK) +1.6% point gap

-1% point

No change

+1.6% point gap

(with Core City LEPs)

+1.2% point gap -0.4% point

+0.2% point

GBSLEP Employment Rate Differential (June 2018)

-5.3% point gap (with

UK)

-4.3% point gap

-1% point

-0.4% point

-2.9% point gap


-3% point gap +0.1%

point 0.4% point

% Business 10%+ Employment Growth in 3 Consecutive Years

(2014-17)


England)

+0.0% point gap

+0.5% point

No change

-0.6% point gap


-0.3% point gap

+0.3% point

+0.3% point

Economic Output Indicators

Business Start-up Rate Differential (per 10,000 of Pop)

(2014-17)

-4.2 gap

(with England) +14.3 gap

+18.5

gap

+11.3 gap

+1.9 gap (with Core

City LEPs)

+23.5 gap (with

Core City LEPs) +21.6 gap

+15 gap

Start-up 3 Year Survival Rate Differential (2014-17)

+3.0% point gap (with

England)

-0.3% point gap

-3.3% point

+1.7% point

+6.2% point gap (with Core City LEPs)

-0.1% point gap (with Core City LEPs)

-6.3% point

+1.8% point

% Start-ups Reaching £1m+ Turnover After 3 Years Differential

(2014-17)


England)

-0.3% point gap

-0.2% point

No change



+0.1% point

-0.1% point

Leading Indicators Comparison Dashboard

KPI 1 Create 250,000 Private Sector Jobs by 2030

Private Sector Workplace Employment

Area 2010 2011 2012 2013 2014 2015

Change 2010 - 2016

2016 Number

% of LEP Total

% Growth

Birmingham 338,700 355,200 362,700 365,500 386,700 393,200 62,000 46.2% 18.3% 400,700

Bromsgrove 28,700 29,200 30,700 30,300 31,700 33,300 14,800 11.0% 51.6% 43,500

Cannock Chase 28,500 28,400 29,600 30,300 33,700 34,200 7,100 5.3% 24.9% 35,600

East Staffordshire 45,900 48,100 46,100 48,200 52,600 53,500 6,500 4.8% 14.2% 52,400

Lichfield 33,700 34,800 34,700 36,400 39,000 43,400 11,900 8.9% 35.3% 45,600

Redditch 29,700 29,900 30,400 30,900 31,100 33,400 2,600 1.9% 8.8% 32,300

Solihull 77,400 80,000 87,200 85,100 90,600 98,200 26,200 19.5% 33.9% 103,600

Tamworth 23,800 23,500 27,200 25,300 26,500 28,100 2,300 1.7% 9.7% 26,100

Wyre Forest 27,200 27,500 27,700 26,100 27,200 28,000 800 0.6% 2.9% 28,000

GBSLEP 633,600 656,600 676,200 678,000 719,100 745,200 134,200 100.0% 21.2% 767,800

134,200 Jobs

Created

54% Of Target Delivered

Trends

After declining during the recession to stand at 633,600 in 2010, private sector jobs in the GBSLEP area grew strongly in 2011 (+23,000) and 2012 (+19,600). Growth was slower in 2013 (+1,800) but accelerated again in 2014 (+41,100) and 2015 (+26,100). In 2016 private sector employment grew by a further 22,400 to now stand at 767,8,00. This is 134,200 above the baseline, with 54% of the 205,000 target achieved.

Milestones

Proposed milestones see the majority of the job growth occurring in the period between 2020 to 2030 with 40% of the target to be delivered in the first decade and 60% in the second. Significant private sector jobs growth to date has resulted in the GBSLEP being well ahead of profile in achieving the 250,000 jobs target.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

600,000

650,000

700,000

750,000

800,000

2010 2011 2012 2013 2014 2015 2016

GBS LEP Pr ivate Sector Employment

Change from Baseline Total Private Sector Employment

0

10,000

20,000

30,000

40,000

50,000

600,000

650,000

700,000

750,000

800,000

850,000

900,000Private Sector Jobs Milestones

Annual Job Growth Actual Employment

Target Profile

LEP LA Performance

All nine areas have seen private sector employment growth since 2010. The majority of the 134,200 private sector jobs that have been created in the GBSLEP area between 2010 and 2016 have come in Birmingham with 62,000 jobs created in the city. This accounts for nearly half (46%) of all the private sector jobs created; Solihull is the next largest contributor with 26,200 (20%). As the two largest economies in the LEP area this would be expected. If we look at the % growth in private sector employment in each area we can see that Bromsgrove (52%) and Lichfield (36%) have seen the biggest rise proportionately in private sector jobs.

KPI 1 Create 250,000 Private Sector Jobs by 2030

Intermediate & Contextual Indicators As this KPI is measured by data released annually with a one year time lag the following intermediate indicators are displayed in order to highlight current performance and trends relating to this KPI.

Increased31%

Unchanged 59%

Decreased12%

0%

10%

20%

30%

40%

50%

60%

70%

Attempted to Recruit Difficulty Recruiting

Q3 2017 Q4 2017

Recruitment The Greater Birmingham Chamber Quarterly Business Report (QBR) Q4 2017 shows that in October to December 2017 31% of firms in the LEP area saw there workforce increase, up slightly (+2% points) from Q3. The share of firms whose workforce decreased fell from 13% in Q3 to 12%.

Recruitment Difficulties The Q4 QBR found that 55% of firms attempted to recruit in Q4 2017 up on the previous quarter (49%)). The majority of jobs recruited for were full-time, permanent positions. There was a fall in the percentage of firms experiencing recruitment difficulties down from 64% in Q3 to 57% in Q4. The main reasons cited by firms were candidates not having the right skills, qualifications or levels of experience, but also candidates not having the correct attitude for work.

Resident Employment Rates Whilst a significant number of private sector jobs (134,200) have ben generated in the LEP area since 2010, public sector employment has fallen by 27,500 so net workplace employment growth stands at 107,700. The number of LEP residents (16+) in employment after falling initially has picked up over recent years to reach a level well above the high reached prior to the downturn. The latest data for Q2 2017 shows a rise in resident employment in the LEP, up by 5,800 to 903,100.

31%

of firms reported an increase in labour force in

Q2

780,000

800,000

820,000

840,000

860,000

880,000

900,000

920,000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Resident Employment

Pre Recession Peak

KPI 2 Increase GVA by £29bn by 2030

£6.4bn GVA

Growth

15.8% Of Target Delivered

Trends

Real GVA (which removes the impacts of inflation) in the GBSLEP fell sharply during the recession but has shown a steady recovery since 2009 with the 2014 figures pushing economic output in the LEP area back above its pre-recession peak for the first time. In 2016 GVA continued to grow, although the pace of growth had decelerated slightly since 2015.

Milestones

The proposed GVA milestones see the majority of the output growth occurring in the period between 2020 to 2030 with 40% of the target to be delivered in the first decade and 60% in the second. This is to take into account that major GBSLEP initiatives will impact more on GVA in the second decade. The 2016 figures continue to measure slightly ahead of profile to deliver the 2020 GVA growth target.

LEP LA Performance

GVA figures are not available at district LA level the lowest geographical level that official GVA data is available at is for Unitary Authority. However, a figure for the Districts as a whole can be derived and GVA figures for Birmingham, Solihull and the Districts are presented in the table below. Birmingham was the biggest contributor to economic growth in the LEP area in 2015 (+628) accounting for 48% of GVA growth. Solihull experienced the strongest growth rate with its economy expanding by 3.6% in 2016.

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

35,000

37,000

39,000

41,000

43,000

45,000

47,000

49,000

2006 2008 2010 2012 2014 2016

GBS LEP Real GVA

Total GVA (£m)

02004006008001,0001,2001,4001,6001,800

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000Real GVA Milestones

Annual GVA Growth Actual GVA £m Target Profile

GBSLEP Real GVA 2015 £m

Area 2010 2011 2012 2013 2014 2015

Change 2015-2016

2016 £m %

Birmingham 22,882 23,008 22,990 23,570 24,411 25,092 628 2.5% 25,720

Solihull 5,489 5,448 5,794 5,870 6,271 6,745 243 3.6% 6,988

Districts 11,999 12,455 12,366 12,550 13,014 13,668 434 3.2% 14,102

GBSLEP 45,505 1305 2.9%

2016 GVA

Birmingham Solihull Districts

GVA up

£628 mill

2.5%

GVA up

£243m

3.6%

GVA up

£434m

3.2%

KPI 2 Increase GVA by £29bn by 2030

Intermediate & Contextual Indicators

As this KPI is measured by data released annually with a one year time lag the following intermediate indicators are displayed in order to highlight current performance and trends relating to this KPI.

Increase 71%

Unchanged20%

Decrease9%

Business Confidence The majority of firms (71%) in the GBSLEP area are still expecting turnover to improve over the coming 12 months. An increase from the 69% recorded in Q3 2017.

Productivity - GVA per Hour Worked The latest official GVA per hour worked figures which are the ONS preferred measure of productivity are displaced in the adjacent chart which shows that of the LEP core cities the GBSLEP has the 5th highest productivity at £28.9 per hour compared to £32.6 for the UK as a whole. The West of England LEP is the only core city LEP with higher productivity than the UK. There was very limited change on last years productivity data and GBSLEP did not change at all.

GVA per Worker If we look at GVA per worker the GBSLEP performs better having the second highest rate amongst the core city LEPs, although it has declined by 0.9% in the last year. Only the West of England LEP saw any growth in GVA per worker among the Core City LEPs. The most significant decline was in Liverpool at -2.7%.

71%

of firms expect turnover to

improve in next 12 months

Ranked Core City Real GVA per Worker 2015 £

Area 2015 2016

Change 2015-2016

£ %

West of England 57,095 57,998 903 1.6

GBSLEP 51,476 50,991 -485 -0.9

Liverpool City Region 51,674 50,257 -1,417 -2.7

Greater Manchester 51,208 50,255 -953 -1.9

Leeds City Region 49,198 49,126 -72 -0.1

D2N2 48,855 48,403 -452 -0.9

North Eastern 48,279 48,553 48,279 48,553

Sheffield City Region 46,302 45,641 -661 -1.4

CC LEP Average 50,511 50,153 -358 -1%

London 80,800 81,338 538 0.7

£0

£10

£20

£30

£40

£50

Live

rpo

ol

D2

n2

Gre

ater

…

GB

SLE

P

Lee

ds

Cit

y…

No

rth

Ea

ste

rn

She

ffie

ld C

ity…

Lon

do

n

UK

GVA Per hour worked

West of England

Liverpool

D2n2

Greater Manchester

GBSLEP

Leeds City Region

North Eastern

KPI 3 Decrease Unemployment to the National Average by 2020 & To Have the Lowest Unemployment Amongst the LEP Core Cities by 2030

Intermediate & Contextual Indicators As this KPI is measured by data released quarterly with a four month time lag the following indicators are displayed in order to highlight current performance and trends and provide context for this KPI.

District Claimant Count Unemployment Data

Economic Activity Economic activity is a measure of labour market participation. It is a count of those of working age who are either employed or unemployed but actively seeking work. After falling sharply during 2013-2015, which saw the gap with the UK widen, economic activity in the LEP has begun to recover in recent months. In Q1 2018 the economic activity rate increased slightly from 74.9% to 75% and the gap with the UK remained at 3.3%.

Claimant Count Unemployment After falling sharply in the recovery since the Great Recession, unemployment plateaued. Although, since January 2018, the claimant rate for GBSLEP has increased from 4.0% to 4.9%. This coincides with a national increase in unemployment from 2.4% to 2.7%, over the last 6 months. The claimant count rate gap between GBSLEP and the core city LEP average has widened by 0.6% since January. Claimant unemployment by LEP LA is shown in the table below.

70.0

72.0

74.0

76.0

78.0

80.0

16-64 Economic Activity Rate

GBSLEP UK

Claimant Unemployment - July 2018

Area JSA Claimants UC Claim-

ants

Total Claimant Unemployed

Number Claimant

Proportion %

Claimant Rate %

Birmingham 15,234 22,961 38,195 5.2 7.5

Bromsgrove 448 322 770 1.3 1.5

Cannock Chase 582 243 825 1.3 1.6

East Staffordshire 623 232 855 1.2 1.3

Lichfield 185 600 785 1.3 1.6

Redditch 248 1052 1,300 2.5 3.0

Solihull 626 2439 3,065 2.4 2.9

Tamworth 188 772 960 2.0 2.3

Wyre Forest 744 241 985 1.7 2.0

GBS LEP 18,878 28, 872 47,750 3.6 4.7

UK 422,578 481,377 903,955 2.2 2.7

Claimant proportion: claimants divided by 16-64 population. Claimant rate: claimants divided by economically active. 16+ population

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%Claimant Count Unemployment

Series1 Series2 Series3

KPI 3 Decrease Unemployment to the National Average by 2020

To Have the Lowest unemployment Amongst the LEP Core Cities by 2030

Milestones

The latest data saw the unemployment differential with the UK remain at 1.6% in Q1 2018. GBSLEP is still currently behind its target profile to close the gap with the UK by 2020.

As with the profiles for KPI 1 & 2 the majority of the gap with the leading core city LEPs is profiled to be closed in 2020 to 2030. The gap with the West of England has fluctuated over recent years but and has narrowed to 2.1% points in Q1 2018 (down by 0.1% on Q4 2017) and is down by 3% points on the baseline position and currently ahead of profile.

Gap Down by

1.1% Points


Gap Down by

3% Points

59% of Target Delivered

West of

England 3.8%

Sheffield

5.2%

Liverpool

4.8%

Manchester

4.8%

GBSLEP

5.9%

UK

4.3%

North

East 5.2%

D2N2

3.7%

LEP Cc Average

5.1%

Leeds

4.5%

LEP Core City Unemployment Rates Q1 2018

annual population surveyONS Crown Copyright Reserved [from Nomis on 18 October 2013]

confidence 95% confidence interval of percent figure (+/-)

variable Unemployment rate - aged 16-64

Datenumerato

rdenominator GBS LEP

Dec-04 57,500 863,700 6.7

Mar-05 57,800 874,300 6.6

Jun-05 59,800 870,600 6.9

Sep-05 56,000 860,800 6.5

Dec-05 56,800 858,900 6.6

Mar-06 56,600 848,900 6.7

Jun-06 54,800 853,600 6.4

Sep-06 59,300 866,100 6.8

lep:Greater Birmingham and Solihull

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Unemployment Milestones- Core Cities

Actual Gap Target Pr ofi le

KPI 4 GBSLEP to be the Leading Core City LEP by 2030 for GVA per Head

Gap Down £999

Per Head


Trends

The gap in real GVA per head between the GBSLEP and the leading LEP (West of England LEP) fell sharply between 2014-2015, but has widened slightly between 2015-2016.

Milestones

The proposed GVA per head milestones see the majority of the closing of the GVA per gap occurring in the period between 2020 to 2030 with 40% of the target to be delivered in the first decade and 60% in the second. The GVA per head differential is below the 2010 baseline and broadly on profile (2016 is just £236 below the profile target).

-1,000-800-600-400-20002004006008001,0001,2001,4001,6001,800

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000GVA per Head Milestones

Annual Change in GVA per Head Gap Actual Gap £ Target Profile

GVA per Head by Area

2016 GVA per head figures and how they have changed between 2015-2016 in the three component areas of the LEP are displayed in the chart opposite. Solihull has the highest GVA per head in the LEP area and has experienced the strongest growth between 2015 and 2016.

3,0003,5004,0004,500

5,0005,5006,0006,5007,000

7,5008,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000

GVA per Head Differential

GBS LEP West of England G ap

KPI 5 Increase the % of Working Age Population with NVQ3+ to the National Average by 2025

Gap Up by 1.0% Points

18% Increase in

Gap on Baseline

Trends

The GBSLEP has consistently underperformed compared to the national average on this KPI. The skills gap widened sharply in 2011 before closing again. The most recent data for 2016 shows the gap opening from 5.6% points to 6.6% points, pushing the gap back up above the 2010 baseline level.

Milestones

Proposed milestones see the majority of the NVQ3+ gap being closed between 2020 and 2025, reflecting the longer term nurture of achieving change in qualification levels. There has been an increase in the differential since the baseline year so currently we are behind the target profile ion this KPI.

LEP LA Performance

NVQ3+ qualification levels vary across the nine LEP LA areas with Redditch, Tamworth and Cannock currently having the lowest rates Bromsgrove and the Wyre Forest are currently the only areas in the LEP with rates above the national average.

Annual Population Survey NVQ qualifications data is available at district level however, due to the small sample sizes at the lower geographical levels the ONS do not advise using the data at this level. Therefore the district data in the table below is subject to sampling error and change in annual qualification levels may not reflect genuine movements in NVQ3+ attainment

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

NVQ3+ Differential

GBS LEP UK Gap

0.0%

2.0%

4.0%

6.0%

8.0%

NVQ3+ %

NVQ3+ Milestones

Actual Gap Target Profile

Area 2010 Baseline 2015 2016 Change 2015-16

Number % Number % Number % Number %

Birmingham 281,600 41.5 343,500 49.1 341,100 48.4 -2,400 -0.7

Bromsgrove 28,000 49.6 31,900 56.9 33,500 59.5 1,600 2.6

Cannock Chase 23,800 38.3 27,900 45.3 28,700 47.0 800 1.7

East Staffordshire 36,100 49.8 32,900 46.6 35,500 49.3 2,600 2.7

Lichfield 30,500 49.2 34,300 55.1 34,400 55.9 100 0.8

Redditch 19,300 33.6 22,700 41.6 23,100 43.6 400 2.0

Solihull 66,100 52.4 69,300 54.8 70,900 55.2 1,600 0.4

Tamworth 17,300 35.1 23,300 47.3 21,200 44.5 -2,100 -2.8

Wyre Forest 26,600 43.5 33,100 55.7 34,400 58.5 1,300 2.8

GBSLEP 529,200 43.2 618,800 49.9 622,900 50.1 4,100 0.2

LEP Core City Average 4,681,200 45.7 5,384,900 52.3 5,474,400 53.0 89,500 0.8

UK 19,667,600 48.8 22,623,600 55.5 23,189,700 56.7 566,100 1.2

0%

2%

4%

6%

8%

20%

25%

30%

35%

40%NVQ4+ Differential

GBS LEP UK Gap

KPI 5 Increase the % of Working Age Population with NVQ3+ to the National Average by 2025 Intermediate & Contextual Indicators As this KPI is measured by data released annually the following indicators are displayed in order to highlight current performance and trends and provide context for this KPI.

0%

1%

2%

3%

4%

5%

6%

4%

6%

8%

10%

12%

14%

16%

18%

20%

No Qualifications Differential

GBS LEP UK Gap

NVQ4+ The percentage of the 16-64 population with NVQ4+ (degree and above) has grown steadily in the GBSLEP since 2004. However, the gap with the UK proportion widened as the recession hit before narrowing again more recently. However, the latest data for 2016 shows the gap with the UK widening again, up from 4.6% points in 2015 to 5.4% points in 2016.

No Qualifications The GBSLEP has a higher percentage of working age residents with no qualifications compared to the UK average. The proportion of unqualified residents in the LEP has fallen in recent years the most recent data for 2016 shows the gap with the UK narrowing as the % of residents with no qualifications fell faster in the GBSELP than nationally.

School Attainment - GCSE 5+ A*-C Inc. English & Maths 2015/16 and Change on 2014/15

KPI 6 Increase Productivity Rates to the National Average by 2030

GBSLEP £28.9

GVA Per Hour

-1.00

-0.50

0.00

0.50

1.00

25.00

26.00

27.00

28.00

29.00

30.00

GBS LEP Real GVA per Hour

Annual Change GVA per Hour (£)Trends

Productivity as measured by GVA per hour worked has consistently been lower in the GBSLEP economy than at a national level and the differential with the UK has actually widened during the recovery as productivity levels declined locally. Core city LEP productivity over the last 5 years is shown in the table below, currently the GBSLEP has the 5th highest productivity amongst the core city LEPs.

West Midlands LAs - 2016 Productivity

The 2016 GVA per hour worked figures for the unitary authorities in the West Midlands region are shown in the table below. Solihull has the highest productivity rate in the region and is the only area with productivity rates above the UK average. GVA per hour fell notably in Sandwell, Dudley and Walsall (by 2.5%, 1.1%, and 2.0% respectably). Elsewhere, growth was relatively static, except for Coventry at 0.9% growth in GVA per hour.

Real GVA per Hour Worked (£) - West Midlands (2016)

Area 2010 2011 2012 2013 2014 2015 2016

Change 15-16

Amount £

%

Worcestershire CC 26.6 26.8 27.3 28.2 28.7 29.6 29.4 -0.2 -0.6

Staffordshire CC 27.2 26.9 26.4 26.0 26.1 26.8 26.8 0.1 0.2

Birmingham 29.3 28.6 28.0 27.5 27.6 28.1 28.1 0.0 0.1

Solihull 35.0 34.6 34.6 34.9 35.5 36.4 36.4 0.0 0.0

Coventry 27.3 27.1 27.3 27.5 28.1 29.1 29.4 0.3 0.9

Dudley 25.7 25.9 26.4 26.6 26.7 27.1 26.8 -0.3 -1.1

Sandwell 26.9 27.1 27.0 26.4 25.7 25.3 24.7 -0.6 -2.5

Walsall 26.2 26.8 27.5 27.9 28.1 28.0 27.5 -0.6 -2.0

Wolverhampton 23.5 23.6 24.4 25.1 25.8 26.5 26.4 0.0 -0.1

West Midlands Region 28.0 27.8 27.8 27.7 27.9 28.4 28.3 -0.1 -0.3

UK 32.1 31.9 31.9 32.0 32.1 32.7 32.6 -0.1 -0.4

Ranked Core City LEP Real GVA per Hour Worked (2016)

2010 2011 2012 2013 2014 2015

Change 15-16 2016

Area £ %

1 West of England 32.4 31.9 32.0 32.0 32.5 33.3 0.0 -0.1 33.3

2 Liverpool City Region 31.1 30.6 30.0 29.7 29.6 30.1 -0.1 -0.4 30.0

3 D2N2 28.1 28.0 28.1 28.2 28.3 28.7 -0.1 -0.4 28.6

4 Greater Manchester 29.6 29.3 29.2 29.1 29.0 29.4 -0.2 -0.6 29.3

5 GBSLEP 29.1 28.6 28.2 28.0 28.2 28.9 0.0 0.0 28.9

6 Leeds City Region 28.2 27.8 27.7 27.6 27.7 28.2 -0.1 -0.4 28.1

7 North Eastern 27.8 27.9 28.1 28.1 28.2 28.6 -0.1 -0.3 28.5

8 Sheffield City Region 26.6 26.4 26.5 26.7 26.8 27.2 -0.2 -0.9 27.0

London 43.2 42.7 42.6 42.6 42.9 43.7 -0.2 -0.4 43.6

UK 32.1 31.9 31.9 32.0 32.1 32.7 -0.1 -0.4 32.6

Gap with UK 3.0 3.3 3.7 3.9 3.9 3.9 -0.2 -5.1 3.7

GBSLEP Ranked

4/8

KPI 7 GBSLLEP to be the Leading Core City LEP for Quality of Life by 2030

Quality of Life Index Rankings

The GBSLEP is currently the 4th ranked core city LEP area in the PWC Good Growth Index which is the chosen tool for monitoring quality of life in the area and our performance relative to other LEP areas. The ranking for the GBSLEP improved by one place in the most recent report moving from the baseline position of 5th to 4th placed. The index score itself on which the rankings are based has also shown improvement with the index score for the GBSLEP improving in absolute terms and relative to other LEP areas. The gap in index score with the leading core city LEP area (West of England) has

narrowed.

-

Index Score Performance

PWC Good Growth Index Rank and Scores Core City LEPs

2011-13 2013-15 2014-16

Score Rank Score Rank Score Rank

West of England 0.33 1 0.57 1 0.68 1

D2N2 -0.2 2 0.09 2 0.19 2

Leeds -0.21 3 0.05 3 0.18 3

GBSLEP -0.37 5 -0.09 5 0.06 4

Greater Manchester -0.27 4 -0.06 4 0.05 5

Sheffield -0.55 7 -0.28 6 -0.11 6

North East -0.57 8 -0.29 7 -0.12 7

Liverpool -0.49 6 -0.36 8 -0.16 8

Gap with West of England 0.70 0.66 0.62

PWC Good

Growth Index

Index Score

0.05

Index Score Change

+0.14

Differential with West of England

-6.1%

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GREATER BIRMINGHAM & SOLIHULL LEP

BOARD MEETING 13 September 2018

Growth Programme Update Report

Recommendations The Programme Delivery Board (PDB) is requested to note the:

• current Local Growth Fund (LGF) programme status for forecast grant claims and outputs;

• current status with project LGF development and delivery, including change controls;

• additions to the Growth Programme strategic pipeline;

• investment decisions made by the LEP Director under delegated;

• summary project completion reports;

• review of the Revolving Investment Fund;

• revised Terms of Reference for the Programme Delivery Board;

• LEP Executive has now taken on responsibility for the Enterprise Zone (EZ) programme management and is undertaking a review of the programme; and

• proposed project assurance process for the EZ Digbeth High Street Public Realm Enhancement project.

LGF programme status Pipeline and project delivery overview

1. The concentration of activity through stage gateways experienced in Q4 2017/18 continued through into Q1 2018/19. In total, four Local Growth Fund (LGF) projects completed in Q1 2018/19, taking the total number of completed LGF projects to 30 out of a current programme size of 59. Further details are provided in Appendix A and B.

2. Case studies for the recently completed Youth Skills & Enterprise Hub and the Birmingham Wholesale Markets have been featured in recent GBSLEP newsletters and added to the GBSLEP website. There are now eleven project case studies that showcase the investments made through the LGF programme, and we will prepare case studies of all appropriate completed projects.

3. Summary project completion reports for projects that have recently reached financial and practical completion regarding LGF funding are included in Appendix D.

https://gbslep.co.uk/projects-and-case-studies?type=case_study

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4. There have been two additions made to the strategic pipeline over the last quarter. These are: ASTUTE, led by Aston University, which aims to create a smart urban technologies centre of research; and the West Midlands DNA 5G prototype project. Further information is included in Appendix B.

5. Following on from the provisional allocation of £20m towards the Commonwealth Games in August 2017, an outline proposal from Birmingham City Council (BCC) was formally requested by 31st August 2018. BCC confirmed at the end of August that they are still not in a position to provide a business case and final submission timescales need to be determined, as more work is required to provide to ensure that it would comply with the GBSLEP Assurance Framework.

Project investment approvals

6. The following project investment decisions have been made since the last meeting by the LEP Director under the scheme of delegation:

• National Memorial Arboretum New Events Building project (NMA) received approval for £500,000 LGF capital grant following the independent appraisal of a Full Business Case (further details are included under Appendix C); and

• Friarsgate, Lichfield project was withdrawn from the programme and the allocated £2,400,000 of LGF funding was removed, following Lichfield District Council’s decision to terminate the project. Subsequently, Lichfield District Council has been encouraged to submit an expression of interest into the Strategic Economic Plan (SEP) Enabling Fund for support towards preparation of future plans for the site or broader ambitions across the city centre, as part of the GBSLEP towns and local centres workstream.

7. At its last meeting, the LEP Board conditionally approved the Outline Business Case for the University Station Interchange project (West Midlands Rail Executive) and the request for £10,000,000, including £2,000,000 to be accessed as Project Development Funding. This approval was subject to further consideration by the Programme Delivery Board at its meeting on 6th September. A verbal update will be provided at the LEP Board meeting.

Programme finances

8. At the end of Q1, the LGF programme was forecasting £37.85m of grant claims against an annual allocation from government of £19.3m. This potential £18.55m annual overspend equates to being over-progammed to 196% in 18/19. In total £3.97m of grant has been paid out to projects, which is nearly four times higher than at this time last year and against a lower annual allocation, providing further confidence in project delivery. Further information is included in Appendix A.

9. Though the principle has been to over-programme to between 140-160%, substantially higher levels of overprogramming have been expected, and are required, over the three remaining years of the programme. It is during this period that projects that experienced financial slippage in 2016/17 will be delivering and require LGF grant to be returned from the Revolving Investment Fund.

10. Reflecting the need to return grant funding from the Revolving Investment Fund to projects that it was originally allocated to, a review of the Fund and the financial profile will be undertaken. The findings and any recommendations will be reported to the next Programme Delivery Board meeting.

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3 of 15

LGF outputs and outcomes review

11. The purpose of this review is to ensure that the outcomes monitored, recorded and reported are realistic and deliverable, and that there is clarity and oversight around how projects quantify the outcomes they propose, and are contracted to, deliver. There was evidence that the current forecasts of some projects’ outcomes were not made on a consistent or realistic base.

12. The review aims to define and clarify which deliverables are direct outcomes of the project and which ones are indirect outcomes, or even wider impacts of the project.

13. The following forecasts are based on the current findings from the review of the majority of completed projects and those in delivery. As the review is still ongoing these forecasts are subject to change and some outcome forecasts are expected to reduce, for instance the total jobs.

Outcome Revised forecast

Actual to Date

Contribution to revised forecast Comments

Total Jobs/Apprenticeships Created

26,922 5,149 19.13%

Note that forecast is higher than the original LGF target of 20,300 jobs created or safeguarded

Housing units complete 10,243 974 9.5%

Note that the forecast is higher than the original LGF target of 4,900 housing units complete

Area of new or improved learning/training floorspace

40,646 37,952 93.37% As this is an output we would expect a 100% achievement

Number of new learners assisted 6,302 654 10.38%

Note that the forecast is lower than the original LGF target of 12,500

Enterprise Zone programme

14. The LEP Board took the decision at its July meeting to transfer the EZ programme management responsibility from BCC to the LEP Executive. The Programme Delivery Board will be meeting for the first time on 6th September since this change of responsibility. The terms of reference have been updated accordingly. Updates on the programme status, which are based on quarterly monitoring reports, will be reported to the LEP Board alongside updates on the LGF programme.

15. To support this transition of EZ programme management responsibilities to the LEP Executive, there two initial pieces of work undertaken: project healthcheck; and a programme review.

16. The project healthcheck is being commissioned to independently review the status of all live EZ projects. It will recommend any corrective actions that may be required to assure that projects will deliver the agreed benefits, within the agreed cost and timescales. The findings of this work are scheduled to be available November.

17. Additional to the project-level healthcheck, the programme review that was being undertaken previously on the EZ will be continued and expanded to include the GBSLEP Programme Management Office (PMO) arrangements. This review is intended to ensure that the PMO

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arrangements are designed to effectively manage both the Growth Programme (Local Growth Fund and Growing Places Fund) and the EZ.

18. The review will produce a series of recommendations on operational processes, stage gateway approach, resourcing requirements and roles and responsibilities. Resourcing options to conduct the review are currently being explored and the review is due to conclude by December, though process improvements will be implemented as this work progresses.

Project investment approvals

19. The Digbeth High Street Public Realm Enhancement project will be reaching the full approval stage in the autumn. The project is part of the scope of the Metro Birmingham Eastside Extension scheme which is preparing its Interim Full Business Case. To avoid duplication of appraisals, and to accommodate the fixed timescales for submission to Department for Transport (DfT), the Programme Delivery Board have been recommended that the assurance process is relies on the West Midlands Combined Authority (WMCA) appraisal. GBSLEP are already integrated into various stages of the WMCA appraisal process. Any approval would be subject to final DfT appraisal and approval.

Conclusions 20. With the risk of financial slippage in 2018/19 being managed, the focus has moved to continuing

the support for and appraisal of strategic pipeline projects in development, and reflecting on the benefits of projects within the programme. The introduction of Enterprise Zone programme management responsibility will require further review to the PMO arrangements to ensure that they are fit for this revised purpose.

Prepared by: Tom Fletcher, Acting Head of Delivery Contact: [email protected]

0121 303 2150 / 07860 906438 Date: 3rd September 2018

mailto:[email protected]

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Appendix A - Programme Level Key Issues and Strategic Risks – September 2018

Overall Programme Status (Current Key Issues)

Budget Time Benefits

↔

Growth Deal funding insufficient to deliver all projects we would ideally take forward. SEP Delivery Plans informing where to target resources to ensure we achieve greatest impact for the resources available.

↑

Greater confidence in the accuracy of project delivery plans following ongoing testing through additional Programme Management Office (PMO) resource and PDB.

LGF over-programmed to 200% in 2018/19.

↔

With the exception of skills, and to lesser extent commercial floorspace, forecast outputs exceed original forecast. The ongoing comprehensive review of benefits indicates that the skills forecast is higher than previously thought, but the original target is unlikely to be met.

Actions in hand:

1. Pipeline projects being developed to Outline Business Case allowing other potential sources of funding to be identified and pursued.

2. Exploration into options to provide greater support to develop pipeline projects in order to take advantage of current and future funding opportunities.

3. Additional LEP resources secured to support access to alternative funding streams. £7.7m successful bids supported so far.

4. Additional resource to support project funding strategies being secured.

Actions in hand:

1. Level of overprogramming for 2018/19 higher than previous years to reduce risk of any slippage.

2. Revolving Investment Fund to be returned to the LGF programme to accommodate overprogramming and smooth out uneven financial profile through to 2020/21.

3. Higher risk projects being closely monitored following resetting the baselines at PDB and through change controls. Developed pipeline will enable re-allocation of funding from underperforming projects.

4. Ongoing PMO improvements completed will support understanding of project delivery confidence.

Actions in hand:

1. Emerging SEP Delivery Plans to clearly identify priority interventions required to support the SEP ambition and targets. Strategic pipeline review to be conducted in light of this.

2. Review meetings held with all completed projects to commence testing of outputs and outcomes, following improved guidance provided to projects.

3. Project evaluation guidance prepared as part of next phase of PMO improvements to support overall programme evaluation.

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Financials

Financial Year Previous

Years 2017 /18

2018 /19

2019 /20

2020 /21

Total

Growth Deal allocation £63.20m £25.70m £19.30m £12.72m £31.85m £152.77m Forecast Expenditure* £63.20m £23.26m £37.85m £17.99m £23.80m £166.08m Variation - -£2.44m +£18.55m +£5.27m -£8.05m - Level of overprogramming - 90% 196% 141% 75% - Revolving Investment Fund** £33.29m Growth Deal Funding available for Strategic Pipeline

£19.98m

Claims to date 2018/19 £3.97m * Forecast expenditure does not include priority pipeline projects until a conditional allocation is made. **RIF can be converted back to grant to cover any annual over allocation, if required.

Stage Gateway Progress

Number of

Projects Proportion

Variation from Last

Quarter Total Funded Projects 59 100% +1

Live Projects 28 49% -4 Completed Projects 30 51% +4

Projects by Stage Gateways

Completed Projects (Stage Gate 6+) 30 50% +4

Delivery (Stage Gate 5) 17 29% -3 Contracting (Stage Gate 4) 5 9% -1

FBC (Stage Gate 3) 6 10% 0 OBC (Stage Gate 2) 1 2% +1

Benefits

Total Outcomes and Outputs

Public / Private contributions

(£m)

Jobs created /

safeguarded Homes

built

Commercial Floorspace

(m2)

Learners Assisted

(p.a.) Total Forecast 296.5 26,922 10,243 507,700 6,302

Growth Deal Target 119.0 20,300 4,900 641,703 12,500 Variation +177.5 +6,622 +5,343 -134,003 -6,198

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Key Strategic Programme Risks

Risk Status Management response

Project development and delivery stalls due to lack of resources or internal support within project sponsors

↔

Significant historical slippage evident in 2016/17 and 2017/18 and certain themes of project pipeline slow to progress.

• Additional resource established within the LEP Programme Team to support project sponsors to develop and deliver projects

• Test forecast financial profiles with project sponsors and notify them that slipped funding will be at risk

• LEP resource identified to support capability building in Council partners

• LEP project development funding being accessed by projects to progress from OBC to FBC

• SEP Delivery Plans identify pipeline projects where the LEP will intervene to accelerate development

• More rigorous assessment of deliverability has been adopted as part of GD3 appraisal processes

• Increased use of overprogramming enables easier switching of resources from stalled projects in future years

Poor programme management decisions are made due to a lack of accurate data on projects

↔

Manually operated data management systems are time consuming and create the potential for errors in the processing of information from highlight report to management system to report

• Additional resource recruited into the LEP to more proactively assess project information

• PDB ‘Star Chambers’ review projects that are assessed to be a higher risk of not proceeding to plan

• First phase of PMO improvements made April 2018 and next phase of changes over Q1/2 18/19

• New project monitoring, change request, completion and evaluation forms are providing more relevant data

• New Programme Management System (PMS) to enable improved data management and reporting to be explored following project-data review and PMO formalisation

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Appendix C – LGF Project Investment Decisions

National Memorial Arboretum: New Event Building Recommendations 1. The Programme Delivery Board is requested to:

i. Note the approval of £500,000 (five hundred thousand pounds) of Local Growth Fund (LGF) capital grant to the National Memorial Arboretum (NMA) for the delivery of the NMA New Events Building project. This decision was made by the LEP Director under delegated authority and is in accordance with the LEP Assurance Framework following the submission of a Full Business Case and its Independent Technical Evaluation.

Background 2. In November 2017, the NMA submitted an Expression of Interest for LGF support, to address a

gap in their funding which would enable them to complete the delivery of the new events building project.

3. The total capital project cost is £8,100,000. The Royal British Legion have provided a grant of £6,848,736 and £751,264 has been secured from Treasury (LIBOR fund) and Veolia Environmental Trust leaving a funding gap of £500,000 that is requested from GBSLEP to complete the fitting out of the new event building.

4. The project received an A rating for strategic fit and it was agreed that the project should proceed straight through to Full Business Case stage given its advanced stage of development.

5. GBSLEP worked with the NMA to develop the Full Business Case with input from AECOM and a final submission was received on the 10th July 2018. An Independent Technical Evaluation was conducted by the LEP Executive in August 2018. The evaluation concluded that the project has satisfied GBSLEP’s assurance requirements for deliverability and value for money in line with and proportion to Green Book guidance. As such, the business case and its evaluation have been used as the basis to recommend the approval of LGF grant investment.

6. Following the recommendation by the LEP Executive, the LEP Director approved the £500,000 LGF capital grant under delegated authority on 19th August 2018.

Case for Change 7. The NMA was registered as an independent charity in 1995 to establish a UK National Centre of

Remembrance. Since 2003 the Royal British Legion and from 2007 the Armed Forces Memorial have provided financial support, however the NMA are still reliant on grants and there is a growing need to be self-sustaining.

8. The NMA New Events Building project will construct a purpose-built 1,308sqm permanent event space, which has the potential to attract major national events and generate additional income in the long-term through corporate hire, to build a sustainable business model for the charity. The current visitor numbers stand at 300,000 per annum. The project will help drive additional visitor numbers and contribute towards the overall target of 382,000 visitors per annum by 2022 and 480,000 by 2026.

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9. Event income is an integral part of the NMA’s business model and sustainability, with over 200 memorial dedication and remembrance events each year hosted in a temporary marquee. However after eight years use this is progressively degrading. In addition the marquee is not equipped or of sufficient quality to handle a wider range of events and hires. Investment in a new permanent event building will provide a home for all existing events and a facility that can be marketed for corporate and organisational conferences, events and meeting hire. Income generated from this activity will provide a new income stream to support the NMA.

The milestones for the practical delivery of the NMA New Events Building are set out below:

Milestone Start date Completion date

Groundworks 27th November 2017 9th March 2018

Superstructure 29th January 2018 30th May 2018

Internal fit out 12th March 2018 10th August 2018

Practical completion 13th August 2018

10. The project is expected to have the following economic benefits:

• £7.6 million match funding secured from three private sector sources, towards the £8.1m total project cost.

• Potential to generate a Net Present Value (NPV) of £21.4 million over a 10 year period discounted at 3.5%.

• A Benefit Cost Ratio of 1:3.4 when considering all project costs, revenues and indirect visitor economy benefits, placing the project in the high Value for Money category.

• A return of £60 for every £1 of LGF investment.

Outputs and Outcomes 11. The project is expected to result in the following outputs and outcomes:

Funding Profile 12. The match funding has been secured and the project will reach practical completion by

September 2018. The funding profile is set out below. The LGF funding request in 2018/19 has been assessed as affordable from a LEP programme level.

Square meters of new floor space created 1,308 sqm by September 2018

Remembrance event bookings 221 per annum by 2026

Corporate hires 124 per annum by 2026

Visitor numbers 480,000 per annum by 2026

Jobs created 3.5 FTE by May 2019

Jobs safeguarded 2 FTE by May 2019

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13. The National Memorial Arboretum has declared this project as State Aid compliant as it falls

within the exemptions provided by articles 17 and 53 of the EU Commission Regulation No. 651/2014 for being both an SME and a Cultural Organisation.

Conclusions 14. The project will construct a purpose-built 1,308sqm permanent event space to support

development of a sustainable income stream for the regionally and nationally significant National Memorial Arboretum. A permanent building delivers the greatest potential to attract major national events and generate additional long-term income through corporate hire to support the charity. The LEP Director is requested to approve the investment of £500,000 LGF capital grant funding for the National Memorial Arboretum New Event Building project in the 2018/19 financial year.

Reviewed by: Wendy Edwards

Project Champion

Prepared by: Theodora Tsang Project Support Officer


07864931387 Date: 17th August 2018

Capital funding (£000s) 2018/19

The Royal British Legion £6,848,736

Treasury (LIBOR Fund) £500,000

Veolia Environmental Trust £251,264

GBSLEP £500,000

Total capital cost £8,100,000


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Appendix D – Summary LGF Completed Project Reports

Engineering Centre for Manufacturing Support In summary Organisation: South & City College Birmingham (SCCB) Location: Bordesley Green, Birmingham Project: Local Growth Funding (LGF) helped to develop a new dedicated training facility for engineering SMEs. The centre provides vocational courses and apprenticeship programmes to young people in the local area. Value of Funding: £207,000 of Local Growth Funding Total project cost: £501,000 Project dates: September 2015 – June 2018 The opportunity The manufacturing sector has a long and successful history in the GBS area. Despite pressure from global competition, the region boasts leading car and engine manufacturers, including Jaguar Land Rover, and outstanding research and development through companies such as Changan. However, an ageing workforce and national skills deficit means that many firms are recruiting from a smaller pool of existing skilled labour. For many SMEs in particular, taking on more apprentices is a new venture and requires investment in training and technologies. Therefore, the region needs to ensure that it can provide the right number of trained employees who are equipped for the working world. To address this issue, SCCB established an Engineering Centre to provide apprenticeship programmes to support SMEs that have not previously employed apprentices and semi-skilled adults. This Centre also aims to increase local business survival rates by ensuring that firms have fully trained staff. Delivery SCCB was allocated £207,000 of LGF to set up the Engineering Centre for Manufacturing Support, including site refurbishment and new equipment. The Centre’s training programme combines advanced manufacturing skills of computer numerical control (CNC) and computer-aided design / manufacturing (CAD/CAM) with the traditional skills and processes of basic engineering, to provide high-quality vocational courses for the local students. The Centre plays a critical role in creating a culture where training is seen as an integral part of the business process, resulting in young people leaving education fully equipped for the working world. Success to date SCCB successfully developed new engineering provision to increase its number of students and support local businesses. As a result, the Engineering Centre has expanded its student intake. SCCB has met or exceeded most of the objectives it was set by GBSLEP:

• Engaged 50 businesses in the engineering and manufacturing sectors (achieving the agreed target and a further 450 businesses are forecast by 2020)

• Engaged 50 SMEs in the supply chain (achieving the agreed target and a further 450 businesses forecast by 2020)

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• Supported over 190 additional apprentices (above the agreed target of 70, with further 60 apprentices forecast by 2020)

Future outlook In the longer term, SCCB is on track to meet all of its objectives:

• Create 310 SME jobs (building on 195 jobs generated so far, with further 205 forecast by 2020)

• Support an additional 300 people into education and training (building on 132 people supported to date, with further 268 people forecast by 2020)

• Safeguard 600 SME jobs in the manufacturing and engineering sectors by 2020

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Motor Vehicle Centre for Advanced Automotive Training and Skills In summary Organisation: South & City College Birmingham (SCCB) Location: Bordesley Green, Birmingham Project: Investment in SCCB’s automotive skills and infrastructure capacity to upgrade existing buildings and equipment, and to match the current supply chain facilities for automotive maintenance and repair. Value of Funding: £242,000 of Local Growth Funding Total project cost: £677,000 Project dates: September 2015 – June 2018 The opportunity The automotive manufacturing industry in the GBS area is a key contributor to the regional economy, with Jaguar Land Rover being one of UK’s leading car and engine manufacturers. However, the local industry has experienced a skills shortage for some time. In response to the need for high-quality training programmes in this sector, SCCB established the Motor Vehicle Centre for Advanced Automotive Training and Skills. The Centre offers access to state-of-the-art equipment and education, to match current supply chain facilities for automotive maintenance and repair. The project supports the LEP’s economic and skills priorities by upskilling the local community and providing a pathway into apprenticeships, ensuring that there is a fully equipped regional talent pool available to local automotive firms. Delivery GBSLEP awarded £258,000 to SCCB to create the Motor Vehicle Centre for Advanced Automotive Skills by refurbishing the existing construction centre at the Bordesley Green site and procuring high quality equipment. In addition to training provision, the Centre enabled SCCB to develop new apprenticeship programmes and to engage with SMEs in order to create a culture where training is seen as an integral part of the business process. Success to date SCCB met or exceeded most of the objectives it was set by GBSLEP:

• Created 50 apprentices in the automotive sector (achieving the agreed target and a further 50 forecast by 2020)

• Created 95 SME jobs (exceeding the agreed forecast of 50 jobs and with further 55 forecast by 2020)

• Engaged 50 SMEs in the supply chain or local cluster (exceeding the agreed forecast of 25 SMEs, with further 150 SMEs forecast by 2020), following highly targeted campaigns

• Engaged 50 businesses in the motor vehicle and advanced automotive industry (exceeding the agreed forecast of 25, with further 150 businesses forecast by 2020)

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Future outlook SCCB is planning to expand its portfolio to provide more apprenticeships, enabling it to offer higher level certifications. It is also on track to deliver its other key objectives:

• Safeguard 50 SME jobs in the motor vehicle and advanced automotive industry (building on 30 safeguarded so far, with further 90 forecast by 2020)

• Support an additional 80 trainees (building on 32 already assisted, with further 468 forecast by 2020).

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Birmingham Life Sciences Park In summary Organisation: Birmingham City Council (BCC) and Birmingham Health Partnership, a formal partnership between the city’s University Hospital Trust and the University of Birmingham Location: Selly Oak, Birmingham Project: Local Growth Funding (LGF) was used to support the acquisition and remediation of a 4-hectare area within the Birmingham Battery site in Selly Oak, to unlock its subsequent development as the Life Sciences Park. Value of Funding: £5.18m of LGF Total project cost: £15.36m Project dates: Land remediation works completed spring 2016 (LGF financially completed summer 2018) The opportunity The Life Sciences industry has been identified by GBSLEP and UK Government as a priority sector. It contributes £180m GVA per annum to the regional economy and remains a vital source of high-skill, high-technology jobs. Located in the Selly Oak and Edgbaston areas of Birmingham, the Life Sciences Park is an Economic Zone that will provide sector-specific support to businesses by expanding on the existing concentration of local life sciences assets. Its location next to high-quality research & development (R&D) centres such as the University of Birmingham and the University Hospitals Birmingham NHS Foundation Trust enables partnership working and provides cutting-edge infrastructure and facilities, including the LGF funded Birmingham Centre for Clinical Haematology. Delivery GBSLEP’s funding supported BCC’s acquisition of 4 hectares within the 12-hectare Life Sciences Park. The site was heavily contaminated and had been previously vacant for several years, but can now be regenerated and transformed into a life sciences cluster of national significance. Success to date The preparation of the land for development will contribute to the eventual sustainable regeneration of the wider Life Science Park which aims to create new employment floor space and become a state-of-the-art R&D facility. The funding has also enabled BCC to invest in further support for the forthcoming Life Sciences Park such as site servicing and infrastructure. Future outlook The creation of a successful Life Sciences Park will help to grow a globally recognised sector, enabling cross-collaboration and quicker development of products and services. As a result, the Life Sciences Park will support significant job creation, graduate retention, supply chain opportunities and economic growth. The preparation of an updated development strategy is currently ongoing and will set out the development timescales.

1

Item 8b - Project Overview and Exceptions - September 2018Local Growth Fund - Programme Financial Profile Summary (2015/16 - 20/21)

Date of last update: 25/07/2018 All figures in £m'sProject Total 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Programme Management

Project Title Project Sponsor

Proj

ect C

ham

pion

Proj

ect S

uppo

rt

Stag

e Ga

te Total Project

Cost

Total LGF Grant

Allocation

Total Match

Funding

Agreed Grant

(1)

Actual Claimed

(2)

Variation (= 2 - 1)

(3)

Agreed Grant

(4)

Actual Grant

(5)

Variation (= 5 - 4)

(6)

Agreed Grant

(7)

Actual Grant

(8)

Variation(= 8 - 7 )

(9)

Agreed Grant (10)

Forecast Grant (11)

Variation(= )

Agreed Grant

()

Forecast Grant

()

Variation(= 7 - 8)

Agreed Grant

()

Forecast Grant

()

Variation(= )

Time

Benefits

Reputation

Cost

Update Background (summary of project)

Commonwealth Games 2022 BCC

Tom - 2 20.000 20.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 5.000 5.000 0.000 15.000 15.000 0.000 Anticipate submission of an outline proposal by September 2018. Provisional allocation of funding towards the infrastructure required for the delivery of the Birmingham

Commonwealth Games 2022.Snow Hill Station (Public Realm) BCC

Tom

Lada 3 9.900 4.660 5.240 0.326 0.326 0.000 1.300 0.000 -1.300 2.800 0.000 -2.800 0.230 1.890 1.660 0.000 2.444 2.444 0.000 0.000 0.000 Project subject has exerienced extended delays in preparing Full Business Case and scope has changed

over the years of development. Project has now progressed with full scheme designs and has been through internal governance within the Project Sponsor. FBC was expected to have been submitted by May 2018 but has experienced further delays and slipped further to August / September 2018. Anticipate a funding gap for the project which has been addressed through the prioritisation of individual interventions

The development will enhance the public realm at and around one of the city’s key railway stations. The project will also deliver economic benefits to the wider Snow Hill district.

Kidderminster Railway Station Worcs CC

Tom

Lada 3 5.295 2.407 2.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.407 2.407 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Delays with GRIP3 completion causing 3-6 mths slippage across timeline as a whole.

WLEP led on appraisal work and have approved the FBC. PDB agreed increase in conditional allocation of 600K. Awaiting final outstanding information on the FBC and appraisal prior to project being recommended for approval by the LEP Director. Anticipate a decision in September 2018.

The scheme will replace Kidderminster's inadequate railway interchange with a new facility. It will improve accessibility to the Wyre Forest for employment, health, education, leisure, retail and tourism including the Severn Valley Railway which is an important regional tourist destination.

Sustainable Urban Extension - Peddimore

BCC

Tom

Lada 3 8.760 2.720 6.040 0.310 0.310 0.000 0.000 0.000 0.000 0.500 0.000 -0.500 0.750 1.250 0.500 1.160 1.160 0.000 0.000 0.000 0.000 Project being considered as part of Growth Deal 3. Project sponsor has stated that the grant funding

requirement can reduce completely. Awaiting formal confirmation from the Project Sponsor.The Unlocking Birmingham Sustainable Urban Extension (SUE) package includes works at two locations adjacent to the proposed Green Belt SUE. These involve improvements to an existing five-arm roundabout and a new access junction for the developments. In effect, these two schemes will unlock and support accelerated economic growth at two major development sites east of Sutton Coldfield.

Lichfield Southern Bypass Staffordshire CC

Wen

dy

Theo 3 17.347 2.300 15.047 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.000 2.000 0.000 0.300 0.300 0.000 0.000 0.000 0.000 FBC submitted to GBSLEP for independent appraisal in May 2018. Anticipate making a funding decision by

July 2018, subject to any clarifications being satisfied. Revised FBC submitted in July 2018 for appraisal taking account the withdrawal of Friarsgate. Anticipate a funding decision in September 2018.

Construction of the final 0.67km of a 2.3km bypass linking two A-roads via a rail-underbridge (consented and possessions confirmed) and housing site distributor road. Delivery of the bypass within the Local Plan period is a key to City centre growth. The congestion relief provided by the bypass will help development sites come forward for housing and jobs and allow local highway and transport improvements to be delivered along the A5127 Birmingham Road Corridor.

Symphony Hall Extension Performances Birmingham Ltd To

m

Lada 3 12.532 4.500 8.032 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.408 0.408 0.000 0.000 0.000 0.000 4.092 4.092 0.000 Development funding approved. Project progressing to FBC in December 2018 as planned, however costs

increases and issues securing match funding have resulted in funding pressures. A change request was submitted in August 2018 and is being reviewed.

A Growth Deal 3 project - Symphony Hall is one of the finest concert halls in the world. Presenting a world-class programme of music and education, it is a major cultural draw for Birmingham. The project will extend and re-model the Symphony Hall’s public spaces to create a building that is economically sustainable, vibrant, and connected to the public realm

Making the Connections (Public Realm)

BCC - - 3 7.200 0.583 0.400 0.476 0.476 0.000 0.000 0.000 0.000 0.107 0.107 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Due to continued slippage, Exceptional PDB decision to withdraw funding, Development fund to remain available to develop FBC if required £476k already drawn down £116k still avaialable BCC to confirm when required. Funding allocation changed to £0.592m to reflect this. FBC no longer expected as the public realm may be included within the scope of the Commonwealth Games programme

To provide high quality connections to Southside (via Lower Hill Street), Mailbox (via Navigation St West) and Colmore Business District (via Lower and Upper Temple Street).

Clean Air Hydrogen Bus Project BCC

Sara

h

Lada 4 11.000 2.156 8.844 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 2.156 2.156 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Delays in progressing grant agreement and financial slippage from Q4 2017/18 into Q1/2 2018/19. Grant

agreement signed May 2018.This pilot project will introduce 22 zero-emission, hydrogen fuelled buses onto established routes across Birmingham City.

Hybrid Vehicle Technology Training Centre

Solihull College & Univercity Centre

Wen

dy

Lada 4 0.594 0.278 0.316 0.000 0.000 0.000 0.000 0.000 0.000 0.278 0.000 -0.278 0.000 0.278 0.278 0.000 0.000 0.000 0.000 0.000 0.000 FBC approved March 2018. Delays in progressing grant agreement but is now prepared for signing in

September.Equip the Hybrid Vehicle Technology Training Centre with new vehicles and appropriate tooling, as well as a new lab which will create opportunities for the students to investigate and apply techniques relevant to autonomous vehicle operation and control.It aims to ensure the College’s automotive and motor vehicle training facilities are updated reflecting emerging technologies and related skills gaps and enabling the development and take up of low carbon technologies.

New Manufacturing Engineering South & City College Birmingham W

endy

Lada 4 0.665 0.250 0.315 0.000 0.000 0.000 0.000 0.000 0.000 0.250 0.000 -0.250 0.000 0.250 0.250 0.000 0.000 0.000 0.000 0.000 0.000 FBC approved March 2018. Delays in progressing grant agreement but is now prepared for signing in

September. Centre launch event scheduled for end of August.To support the establishment of a dedicated training facility for manufacturing engineering SMEs in the supply chains of major national and local companies, enabling them to obtain a supply of suitably qualified and skilled labour. Directly responds to shortages of skilled labour and provides opportunities for both young people and adults to enhance their engineering skills and safeguard and/or lead to sustainable employment. Promotes and support new apprenticeship opportunities in manufacturing engineering.

Birmingham Dance Hub Birmingham Hippodrome

Wen

dy

Lada 4 4.476 1.476 3.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.476 1.476 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Grant Agreement signed June 2018 and project in delivery. Project approval based on £950k confirmed

award and £525k allocated as contingency. Minor delays (~2 months) in planning authorisation and design sign-off, but now in place and within tolerances.

Request from project sponsor for to access £30k contingency. Advised project that contingency could not be claimed until it was spent

To extend the fourth floor above the existing Birmingham Royal Ballet building on Thorp Street to provide the One Dance UK cluster with a space to expand and enhance its dance services. The new facilities will create spaces for international and national dance services that are already based in Birmingham, and those organisations attracted from London into Birmingham’s Dance Cluster.

Journey Time Reliability Improvements to Growth Areas Phases 1 and 2

BCC

Wen

dy

Lada 5 1.568 1.111 0.457 0.000 0.000 0.000 0.211 0.211 0.000 0.420 0.420 0.000 0.300 0.300 0.000 0.180 0.180 0.000 0.000 0.000 0.000 Change control for historical financial slippage agreed February 2018. The Project Sponsor has completed

internal governance for Phase 2 of the scheme and submitted an FBC to access the remaining conditionally allocated funding. FBC to be independently appraised.

This project will see a package of relatively small highway measures which are aimed at improving journey reliability. The scheme primarily aims to minimise delay at strategic junctions along primary routes across Birmingham, which aligns with the local, regional and national objectives, including those of Greater Birmingham and Solihull LEP (GBSLEP). Improved journey times for a variety of modes will also improve the attractiveness of the area, unlocking economic stimulus and growth.

Battery Way Extension, Tyseley BCC

Wen

dy

Lada 5 6.453 3.710 2.743 0.130 0.130 0.000 0.310 0.311 0.000 0.559 0.559 0.000 2.711 2.711 0.000 0.000 0.000 0.000 0.000 0.000 0.000 D&B contractor appointed and construction works started on site June 2018, slipping from April. Change

request received for financial slippage in 2017/18 but review of this is on hold until Q3 18/19 to see how the project performs as Q1 also experienced £140k slippage against £200k forecast. Project completion currently expected to be delayed by 2 months

This project will see the creation of a new 700m long, 7.3m wide single carriageway road between the existing Battery Way and Reddings Lane with the ultimate effect of unlocking a redundant industrial estate. The project will also act as an important catalyst for the regeneration of the wider Tyseley and Greet areas, which are key employment areas for the south-east of the city with more than 15,000 people employed on sites based around the A41 Warwick Road.

Mid-Cannock Freight Interchange Pentalver

Wen

dy

Theo 5 14.638 1.300 13.338 0.601 0.601 0.000 0.699 0.000 -0.699 0.000 0.000 0.000 0.000 0.699 0.699 0.000 0.000 0.000 0.000 0.000 0.000 Project Sponsor presented to PDB in May 2018 to explain current issue stemming from Network Rail

decision regarding 24 hour line usage. PDB agreed revised programme with Pentalver effective from post NR decision in June 18. As of end July, Project Sponsor still awaiting progress on NR decision.

This scheme will create a multimodal logistics terminal at Pentalver’s Cannock site, to integrate rail freight transport and to transfer container freight to final destination by long distance rail trunking and short distance road trunking. This scheme will enable economic development, and feed into improved competitiveness while more efficiently using finite resources and reduce heavy vehicle use of key roads into the Birmingham. freigth terminal

Hagley Road SPRINT TfWM

Tom

Lada 5 14.650 8.100 6.550 0.810 0.810 0.000 0.000 0.000 0.000 0.762 0.762 0.000 2.150 2.150 0.000 0.977 0.977 0.000 3.400 3.400 0.000 Project scope has been substantially expanded following additional WMCA funding allocation, resulting in

a £94.95m scheme.

Ongoing issues regarding lease and disruption concerns of one local business. Utilities orders / works pushed back by 6 months from the March 2018 Funding Agreement milestones. Forecast further changes to the forecast funding profile which will be considered as part of the scheduled Change Request to access the remaining £3.4m allocation expected in December 2017, which will result in further changes to funding profile, scope and milestones and benefits.

Bus Rapid Transit scheme along the Hagley Road to Quinton, a major upgrade to public transport in this corridor linking key areas of Birmingham City Centre such as Broad Street, Paradise Circus, New Street and Moor Street stations and in the longer term Curzon St HS2.

Ashted Circus, Birmingham Ring Road

BCC

Wen

dy

Lada 5 8.100 5.545 2.555 0.223 0.223 0.000 0.000 0.000 0.000 1.853 1.853 0.000 3.469 3.469 0.000 0.501 0.501 0.000 0.000 0.000 0.000 Project in delivery. Minor financial slippage (£20K) in Q1 otherwise project on track. This project will create left-turn slip lanes on both Dartmouth Middleway approaches at Ashted Circus – a key junction

for Aston University, Eastside and the Curzon regeneration area. The benefits of this will see future capacity constraints alleviated by providing an additional approach lane on these arms and also offering the benefit of removing left-turning vehicles from the roundabout, which are predicted to significantly increase in future years.

Longbridge Connectivity Scheme Phase 1

BCC

Wen

dy

Lada 5 8.990 4.860 4.139 0.400 0.400 0.000 1.935 1.935 0.000 1.969 1.969 0.000 0.556 0.556 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Presented exceptions report to PDB in March 2018. Change request approved and being progress by

Accountable Body legal. Seeking further clarifications from Project Sponsor re the railway element – potential change in scope of works to fit into the budget (not LGF). Highway element and claims on track.

A package of connectivity improvements in and around Longbridge and the former Rover site. These include an upgrade of the railway station and a transformation of the existing bus interchange. Furthermore, the Park & Ride facility will be extended and there will be a programme of highway improvements alongside some wayfinding and cycling improvements.

Unlocking Stalled Housing Sites Programme - Phases 1 and 2

BCC

Sara

h

Lada 5 8.998 8.998 0.000 0.000 0.000 0.000 0.073 0.049 -0.024 2.703 1.926 -0.777 4.543 4.543 0.000 1.679 1.679 0.000 0.000 0.000 0.000 Programme reliant on demand and will be prone to variances in quarterly grant claim profile. Delivery

progressing but risk around revenue funding to support programme management remains.Programme to support the acceleration of small housing sites across the LEP working with land owners and small developers to bring forward at least 500 new homes in the area.

Birmingham Cycle Revolution Phase 2

BCC

Wen

dy

Theo 5 8.000 6.000 2.000 1.157 1.157 0.000 1.548 1.548 0.000 0.503 0.503 0.000 1.626 1.626 0.000 1.165 1.165 0.000 0.000 0.000 0.000 Project presented exceptions report to PDB in March and was encouraged to be realistic with forward

programme due to integration with other interventions (inc CWG). Project Change Request received in July 2018 to re-profile Local Growth Fund and match funding to align work with emerging plans for Perry Barr and CWG athletes village with the net effect of increasing LGF expenditure in the current financial year. Change request approved under delegation.Minor Q1 2018/19 financial slippage due to a slight delay in the start of some Green Route schemes and non-utilisation of contingency sums on the 20mph Area B2 initiative.

Part of the 20-year Birmingham Cycle Revolution strategy. Developed to complement and add value to existing cycling projects, and coupled with supporting revenue measures, Phase 2 will support cycle access to major employment sites and Enterprise Zones, better integrate cycling as part of a longer journey by public transport, improve and provide access to opportunity, reduce congestion at key pinchpoints and support improved health and wellbeing.

Iron Lane, Birmingham BCC

Wen

dy

Lada 5 12.984 5.000 7.984 0.380 0.380 0.000 0.060 0.060 0.000 0.000 0.000 0.000 2.960 2.960 0.000 1.600 1.600 0.000 0.000 0.000 0.000 Project presented exceptions report to PDB in March and change control completed for historical financial

slippage. CPO Public Inquiry held on 6 June as planned; further ~3 months to complete the process; DoV with detailed milestones and claims schedule due in October as previously indicated.

This major junction is on a key section of the A4040 Outer Ring Road, effectively connecting east Birmingham with the M6 and major employment sites. This project will see the implementation of two new gyratory arrangements to increase junction capacity and reduce congestion. Dedicated pedestrian/cycle-crossing facilities will be provided to enhance ‘active travel’ and new street lighting.

Selly Oak New Road Phase 1b BCC

Wen

dy

Lada 5 9.223 3.633 5.590 0.200 0.200 0.000 0.000 0.000 0.000 0.229 0.229 0.000 1.656 1.656 0.000 1.547 1.547 0.000 0.000 0.000 0.000 Deed of Variation for historical financial slippage completed ni April 2018. Minor delay on detailed design

work due for completion November 2018, and construction works are programmed to start around March 2019.

Highway improvements to the ‘Selly Oak triangle’, a key junction between the A38 and A4040, providing access to the Life Sciences campus, UoB, and QE Hospital.

2

A34 corridor-Perry Barr Phase 1 & 2

BCC

Wen

dy

Lada 5 6.080 3.500 2.580 0.100 0.100 0.000 1.420 1.420 0.000 0.159 0.159 0.000 0.221 0.221 0.000 0.800 0.800 0.000 0.800 0.800 0.000 SLA for £1.9m approved. Conditional £1.6m subject to FBC addendum to be submitted Autumn 2018.

Project forward plan being reviewed in light of CWG Athletes village and legacy housing requirements. HIF bid submitted in August 2018. FBC addendum for LGF due September 18 but looks likely to slip and confirmation of submission date to be agreed in September.

This project is a package of five measures relating to land acquisitions, highway works at Birchfield Roundabout, public realm enhancements, gap funding for new development and bus interchange improvements at One Stop Shopping Centre.

Commonwealth Games proposal places the Athletes Village and legacy housing adjacent to the scheme. Phase 2 Design needs to accomodate these.

Kingswood Lakeside Access Phase 2

Staffordshire CC

Wen

dy

Lada 5 2.160 2.160 0.583 0.000 0.000 0.000 0.289 0.289 0.000 1.696 1.440 -0.256 0.175 0.431 0.256 0.000 0.000 0.000 0.000 0.000 0.000 Delay due to drainage problem will result in some financial and milestone slippage. Final project grant

claim now expected Q4 18/19 and a change request required. Project Sponsor working with developer to overcome issues and take prepare for Planning App stage. The developer has control of the pace of progression. Subsequent development of the site is forecast to continue through to 2022.

The remediation of the Kingswood Lakeside business park which was created on a former opencast coal mine. Addressing (1) the outstanding infrastructure issues and (2) financing the geotechnical enhancement of the development land bringing it up to the standard required by prospective purchasers Phase 2 of this project will continue the remediation of the site to create 24,749sqm Floor space and 469 new jobs. This will allow the development to progress at a faster rate

National College for High Speed Rail

BCCW

endy

Theo 5 25.555 7.456 18.543 0.000 0.000 0.000 2.373 2.373 0.000 4.561 4.561 0.000 0.078 0.078 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically completed in April 2018 but change request received and ongoing for some additional

works using the LGF underspend on the project. Additional works approved in July 2018 and conditional on completion end Sept 18.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/national-college-high-speed-rail-birmingham-new-training-facility-heart-future-rail-industry

This project will see the construction of the Birmingham campus for the new National College for High Speed Rail to bring forward a 5,703m2 new build training facility for delivery of Level 4+ skills in engineering to support delivery of HS2 and other infrastructure projects.

Changan UK Research and Development Facility

Changan Automotive UK To

m

Theo 5 16.113 1.610 14.503 0.000 0.000 0.000 0.000 0.000 0.000 1.443 1.443 0.000 0.167 0.167 0.000 0.000 0.000 0.000 0.000 0.000 0.000 On track for practical and financial completion by Q3 18/19. The prject will regenerate one of the oldest parts of Birmingham Business Park to create a state of the art automotive

R&D centre. This will further support the areas expertise in the automotive sector, create high value jobs and increase the local and UK knowledge economy. The centre’s initial use is to create new technology for low emission vehicles which will push the boundaries of technology and create class leading vehicles

STEAMhouse Birmingham City University

Wen

dy

Theo 5 42.407 1.000 41.407 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.000 1.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Grant agreement in place including £1m LGF and £14m BEIS. (in non LGF Projects)

Land purchased and claim paid for £4.5m from BEIS funding. Section 31 Grant Determination Letter awarding the second £7m sent to BCC from BEIS. Progressing to plan.

To create a collaborative innovation centre focused around STEAM (science, technology, engineering, arts and maths), including related teaching and learning space delivered by BCU through the STEAM Academy plus commercial space and grow on space for SMEs and office space for a single user or multiple users.BEIS have committed £14m via section 31 grant to be managed by GBSLEP and LGF committed £1m

Aspirations for All Sense UK

Wen

dy

Lada 5 1.206 1.206 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.650 0.650 0.000 0.556 0.556 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project will be financially and practically complete in Q2 18/19. Based at TouchBase Pears in Selly Oak, Sense will bring forward employment related training and development

activities for over 200 sensory impaired and otherwise disabled people (Sense service users) and a further 200 Sense Volunteers.

Tyseley Energy Park Access Road Tyseley Energy Park Limited Sa

rah

Lada 5 3.894 1.763 2.131 0.000 0.000 0.000 0.000 0.000 0.000 0.300 0.000 -0.300 1.463 1.763 0.300 0.000 0.000 0.000 0.000 0.000 0.000 Project in delivery and progressing steadliy after a minor delay. Detailed design work has resulted in a

substantial reduction in costs. Change control completed in August 2018 to reflect the overall reduction in project costs and reduction in the LGF grant allocation by £173k. Deed of variation to be instructed.

A Growth Deal 3 project - The project involves the construction of an Access Road and surface infrastructure route off the A45 through to the Tyseley Energy Park (TEP) enabling off road access – particularly for HGVs, buses, taxis and vans – to support the low/zero emission refuelling hub, which is being promoted by Birmingham City Council (BCC) and led by Webster & Horsfall Ltd.

Friarsgate, Lichfield (Withdrawn) Lichfield DC

Tom

Lada 4 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project withdrawn from the programme and funding allocation removed in August 2018 following

confirmation from the project sponsor that the scheme had been terminated. Project to be removed from the programme.

The redevelopment of a 3.3 hectare site which is located on the fringe of Lichfield’s city centre. Friarsgate is a retail and leisure led mixed use development combining 16,369 sqm of commercial floorspace, 95 dwellings, a new car park, a new bus station and new areas of public realm.

Life Sciences Campus - land remediation

BCC

Tom

Theo 6 15.360 5.119 10.180 5.012 5.012 0.000 0.107 0.107 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q1 2018/19). Due to ongoing delays in receiving a Change

Request from the Project Sponsor, the £61k unused LGF grant has been returned to the programme. Remediation of land complete, however the outcomes t risk due to dependency on progression of Life Sciences Park project.

This project will remediate land in preparation for the Life Science Campus project on a site which is currently contaminated and derelict next to the University of Birmingham and Queen Elizabeth Hospital. The subsequent Life sciences project would provide a science park specifically for life science businesses, capable of supporting over 400,000sq ft of office space, including laboratories

Motor Vehicle Training Centre South & City College To

m

Theo 6 0.632 0.242 0.390 0.237 0.237 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.005 0.005 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q1 2018/19). Awaiting Project Completion Report. The project will invest in the automotive skills and infrastructure capacity of the college to upgrade existing building

and equipment in order to match current state of the art supply chain facilities for automotive maintenance and repair. The project will extend skills into the local supply chain and meet the needs of the automotive service sector. The funds will be used to upgrade and equip the facilities.

Engineering Centre for Manufacturing Support

South & City College To

m

Theo 6 0.544 0.230 0.314 0.182 0.182 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.048 0.048 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q1 2018/19). Awaiting Project Completion Report. This centre will establish a dedicated training facility for engineering SME’s in the supply chains of some our major

national and local companies, enabling them to obtain a supply of qualified and skilled labour. This responds directly to the problem of an increasingly aging workforce in the sector, through promoting the uptake of apprenticeships in engineering. This will improve company survival by assisting them to remain competitive and responsive to the needs of their customers. The centre will provide fertile ground for the exchange of ideas and practice between the college and the engineering manufacturing sector. Funds will be used to modify and equip existing buildings to house the provision to increase capacity.

AMH Phase A - (JB Foods & Rylands Garage)

BCC

Wen

dy

Theo 6 10.706 4.412 6.256 3.208 4.079 0.871 0.934 0.032 -0.902 0.308 0.301 -0.007 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q4 2017/18). Awaiting Accountable Body completion of the

Deed of Variation for minor reduction in grant value prior to issuing financial and practical closure letter to the Project Sponsor. Awaiting Project Completion Report.

The Advanced Manufacturing Hub (AMH) is a 20ha regeneration scheme in Aston, Birmingham to deliver serviced plots for occupiers in the advanced manufacturing sector. It is a joint Birmingham City Council (BCC) and Homes and Communities Agency (HCA) initiative. It has been actively promoted in the ‘Economic Zone’ Prospectus by the Leader of Birmingham City Council. The project is to acquire one private interest within the Advanced Manufacturing Hub (AMH) to create a bigger Plot that will be more attractive to the market. The funding is required to support the demolition and remediation of the land that is in the ownership of Birmingham City Council within the AMH. The Phase A and B LGF funded land 7.5 Ha is capable of accommodating 14,440 sqm of new buildings within the B1 & B2 land use. The Concentric Business Park site at (1.4 hectares) has the potential to accommodate up to 4,675m of new commercial floorspace and could create up to 200 safeguarded and new jobs when combined with HCA landholding to the front of the site.

Longbridge Connectivity - MSCP Phase 2

TfWM

Wen

dy

Lada 6 5.738 1.800 3.938 0.000 0.000 0.000 0.000 0.000 0.000 1.800 1.800 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project at financial completion (Q4 2017/18). Timescales have slipped with practical completion date

slipping Jan 19 to March 19. Cost has increased as well but will be met by project.Expand the Park and Ride as part of the second phase of the Longbridge Connectivity Scheme by increasing parking provision at Longbridge station from 102 spaces to 542 spaces.

Princes Trust Youth Skills & Enterprise Hub

Prince's Trust

Wen

dy

Theo 6 2.455 0.627 1.904 0.000 0.000 0.000 0.000 0.000 0.000 0.627 0.629 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q1 2017/2018). Project Completion Report requested.

Project case study available: http://centreofenterprise.com/projects-and-case-studies/case-studies/youth-skills-enterprise-hub-princes-trust

The Prince’s Trust plan to create a ground-breaking Young People’s Skills & Enterprise Hub in the centre of Birmingham by refurbishing the Cold Store building in the Beorma Quarter into a state of the art building with the aim of up-skilling and supporting unemployed young people into jobs directly or through start-up businesses.

Lode Lane Phase 1 Solihull MBC

Tom

Lada 6 5.240 1.790 3.450 1.790 1.790 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. Package of public transport, cycling and walking improvements on a major route which provides access to significant

development sites including UK Central, Birmingham Airport, and JLR Lode Lane Plant.East Staffordshire Growth and Regeneration Programme

East Staffs BC

Wen

dy

Theo 6 5.700 1.500 4.200 1.500 1.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/east-staffordshire-regeneration-programme

This project brings forward the development of three brownfield land sites currently in ownership of the council for new homes and commercial floorspace.

Food Technology Hub University College Birmingham (UCB)

Wen

dy


Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/university-college-birmingham-food-technology-hub-skills-excellence

This project will see the creation of a ground-breaking food technology and food science hub. Driven by industry, the hub will provide access to specialist facilities that will enable skills development for a growing sector with an already identified chronic skills shortage.

Universities@IBC Innovation Birmingham To

m

Lada 6 10.294 2.494 7.800 0.205 0.205 0.000 2.196 2.196 0.000 0.092 0.091 -0.001 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. Extension to the existing Faraday Wharf incubator building at the Innovation Birmingham Campus to provide an

additional 445m2 of state of the art enterprise space which enables local universities to collaborate with business start-ups, creating 1800 jobs part of the Enterprise Zone.

Centre for Advanced Aeronautical Provision (formerly Aviation Engineering Training Centre)

Solihull College

Wen

dy

Theo 6 3.720 1.059 2.661 0.623 0.623 0.000 0.424 0.424 0.000 0.012 0.012 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q2 2017/18). Awaiting Project Completion Report.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/centre-advanced-aeronautical-provision

This project will see the creation of an aerospace and aviation centre/academy close to Birmingham Airport, providing a link to companies in this sector. This facility will provide the required skills in aerospace engineering in particular relating to maintenance and repair.

Kingswood Lakeside Access Phase 1

Staffordshire CC

Wen

dy

Lada 6 10.149 0.800 9.349 0.800 0.800 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. Gap funding to support remediation works, access, lighting, and drainage works for a prime employment location

adjacent to the M6 Toll, creating 1300 jobs

Meeting the Skills Needs of Local Businesses

South & City College To

m

Theo 6 0.029 0.010 0.019 0.000 0.000 0.000 0.010 0.010 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q3 17/18). Awaiting Project Completion Report. Further

clarifcation of the reported outputs required.This project will create walk in facilities across the colleges three main campuses that replicate the environment of a commercial recruitment agency. Working in partnership with a leading private sector recruitment agency to encourage learners to actively seek careers and employment advice which will be provided by a team of specialist advisors who will utilise current labour market data. In addition learners will be registered onto a candidate matching system database and will be matched to employment opportunities. Employers will support this project by providing the employment opportunities that learners will be matched against.

Metro Extension - Eastside (Project Development)

TfWMDft reporting To

m

Lada 6 5.500 5.500 0.000 5.500 5.500 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Development fees to support the design and development of the full business case. The route will link Midland Metro

with the proposed HS2 station at Curzon Street and then via New Canal Street through Digbeth to Adderley Street

South Kidderminster Enterprise Park – Hoobrook Link Road

Worcs CC

Tom

Theo 6 16.254 4.800 11.454 4.800 4.800 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. This project will enable the completion of phase two of Hoobrook Link Road which connects the A451 Stourport Road

to the A449 Worcester Road. The road unlocks the 24 hectare former British Sugar Site (known as Silverwoods) and will transform the accessibility to and within South Kidderminster Enterprise Park.

Metro Extension - Centenary Square (includes Complementary Highway Works)

TfWM

Tom

Lada 6 42.400 7.970 34.430 7.970 7.970 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. This project will deliver an extension of Midland Metro from Stephenson Street via Victoria Square and Paradise Circus

to Centenary Square, together with a package of complementary highway measures and the creation of a world-class public square.

Sustainable Urban Extension - Minworth

BCC

Tom

Lada 6 2.348 2.280 0.069 0.140 0.140 0.000 1.470 1.470 0.000 0.670 0.670 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q4 2017/18). Outputs are linked with Peddimore which is no

longer part of the programme and further discussion required on attribution of them.The Unlocking Birmingham Sustainable Urban Extension (SUE) package includes works at two locations adjacent to the proposed Green Belt SUE. These involve improvements to an existing five-arm roundabout and a new access junction for the developments. In effect, these two schemes will unlock and support accelerated economic growth at two major development sites east of Sutton Coldfield.

Wholesale Markets BCC

Wen

dy


Project case study available: http://centreofenterprise.com/projects-and-case-studies/case-studies/birmingham-wholesale-market

Relocation of the Wholesale Markets to a purpose built facility at the Hub in Witton. The scheme aims to secure the long-term future of the Wholesale Market within Birmingham through establishing a modern, fit for purpose facility at the heart of a wider hub of food and drink sector activity. Alongside this, it aims to unlock existing development constraints and enable the delivery of the vision for the Smithfield development area within the Birmingham City Centre Enterprise Zone

Journey Time Reliability Improvements to Growth Areas Phase 1 and 2 - Solihull

Solihull MBC

Wen

dy

Lada 6 1.415 1.305 0.185 0.405 0.405 0.000 0.900 0.900 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. This project will see a package of relatively small highway measures which are aimed at improving journey reliability.

These improvements will help to unlock economic growth by linking to Birmingham City Centre Enterprise Zone and UK Central.

WMG Academy for Young Engineers (Future Skills Fund)

WMG University Technical College

Wen

dy

Theo 6 2.216 1.108 1.108 0.000 0.000 0.000 0.599 0.599 0.000 0.509 0.508 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Awaiting Project Completion Report. GBSLEP funding will enable the Academy to purchase improved and more advanced specialist engineering, science,

digital and ICT equipment that will enable young engineering students at the Academy to undertake an even wider range of work on employer-led engineering and advanced manufacturing and design projects using digital and other advanced technologies.

3

North Worcestershire Centre of Engineering Excellence

MGTS

Tom

Lada 6 1.580 0.350 1.230 0.000 0.000 0.000 0.350 0.350 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/north-worcestershire-centre-engineering-excellence

The relocation of MGTS to larger premises, with the refurbishment and equipping of the new facility to support demand driven growth for engineering apprentices. This is a cross LEP project that will increase the number of MGTS apprenticeships by 132 and an additional 35 level 2 to 4+ qualifications (NVQ) in team leader and management skills.

Chester Road BCC

Tom

Lada 6 14.603 1.000 13.603 1.000 1.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Closure Report complete. Contribution to the completion of the A452 Chester Road.. The scheme is on-site and involves highway improvements

including capacity enhancements to the main junctions and links on Chester Road. Advanced Life Science Facilities Solihull College

Wen

dy

Theo 6 1.020 0.445 0.575 0.000 0.000 0.000 0.436 0.436 0.000 0.009 0.009 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practicaly and financially complete. Redevelopment of existing laboratories to provide highly flexible practical spaces for use in subjects across the life

sciences.Enable development of two further laboratories to facilitate programmes from Level 2 to Higher Education. Designed to upskill specialised workforce for life science employers in the region. The facility will also address the current need for professional technical level staff. The new facility will treble the current lab space giving individuals more time in the lab learning the skills required by the sector.

Midland Metro Catenary TfWMTo

m

Lada 6 15.090 3.150 11.940 3.150 3.150 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Closure Report complete. The project covers the proposed installation of Battery Equipment on 30 existing and new trams on TfWM routes

radiating from Birmingham City Centre to Wolverhampton. No direct outputs but potential saving s on running costs and visual impact of catenary-free Metro sections and the ‘demonstrator impact’ of catenary free sections of Metro.

A457 Dudley Road (Project Development)

BCC

Wen

dy

Theo 6 0.450 0.302 0.148 0.000 0.000 0.000 0.000 0.302 0.302 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 £300,000 loaned to cover development fees - full repayment expected once FBC has been approved by

DfT. Project may require CPO process. Major Scheme Business Case to DfT is being drafted – due for a decision in July 2020.

Development funding support for the project. The A457 Dudley Road corridor from Ladywood Middleway / Spring Hill junction on the Ring Road to City Road forms part of Birmingham’s Strategic Highway Network. This project will deliver improvements in capacity, accessibility, safety and reduce congestion through a comprehensive package of junction improvement, road widening to a dual carriageway and making enhancements to pedestrian and cycling facilities.

Birmingham Institute of Haematology

Queen Elizabeth Hospital To

m

Theo 6 3.177 2.402 0.775 0.000 0.000 0.000 0.000 0.000 0.000 2.402 2.402 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete (Q4 2017/18). Project Closure Report complete.

Project case study available: http://centreofenterprise.com/projects-and-case-studies/case-studies/birmingham-institute-haematology-queen-elizabeth-hospital

The project will expand the highly successful Birmingham Centre for Clinical Haematology (BCCH) at the Queen Elizabeth Hospital Birmingham, by converting 2,100 m2 of floorspace in the BCCH building (Morris Building) into premises for clinical innovation and research. This will create vital new capacity for the BCCH’s internationally significant haemato-oncology programme, permitting out-patient delivery of stem cell transplants and complex haemato-oncology care, and increase the scale and breadth of its clinical trial capacity.

Virtual Reality and Robotics Development Centre

Solihull College

Wen

dy

Theo 6 0.393 0.178 0.204 0.000 0.000 0.000 0.044 0.044 0.000 0.134 0.134 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and finacially completed (Q3 2017/18). Project Closure Report complete.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/virtual-reality-robotics-development-centre

The project will link computing and engineering students at Solihull College and University Centre in order to develop the skills required to create and work within virtual reality environments as well as the programming languages used in robotics.

West Midlands Safari Park Skills Academy

WM Safari Park

Tom

Lada 6 0.750 0.066 0.466 0.000 0.000 0.000 0.000 0.000 0.000 0.066 0.066 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete.

Project case study available: https://gbslep.co.uk/projects-and-case-studies/case-studies/west-midlands-safari-park

The project will support the new build installation of a dedicated Training Academy at the West Midlands Safari Park, Bewdley in the Wyre Forest, which will be operated by Birmingham Metropolitan College.

Food and Drinks Advanced Manufacturing Facility

Birmingham Metropolitan College W

endy

Theo 6 0.050 0.024 0.025 0.000 0.000 0.000 0.000 0.000 0.000 0.024 0.024 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Awaiting Project Closure Report. The project will support the installation of a high-quality, industryapproved/ supported, dedicated, specialist Food and

Drink Advanced Manufacturing Facility within the existing Ofsted Grade 1 Engineering Centre at James Watt College in Birmingham. The intended facilities are intended to allow learners to experience a first class environment modelled on employer expectations of a clean and efficient food and drink manufacturing work space being industry standard.

Lode Lane Phase 2 Solihull MBC

Tom

Lada 7 1.691 1.686 0.005 0.400 0.400 0.000 1.286 1.286 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Project practically and financially complete. Project Completion Report has been completed. Complementary works for Phase 1 of Lode Lane Route Enhancement scheme to provide further corridor improvement

works, including delivering additional bus priority, walking and cycling.Programme Management Levy GBSLEP x 1.950 1.950 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.800 0.800 0.000 0.640 0.640 0.000 0.510 0.510 0.000 Agreed LEP Board 05.06.2018. Programme management levy charged against the Growth Deal to resource the programme management function.

Revolving Investment Fund (GPF) GBSLEP x 33.290 0.000 33.290 33.290 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

457.100 166.223 296.464 45.377 46.248 52.266 49.644 -2.622 28.395 23.228 -5.167 33.909 37.852 3.943 15.550 17.994 2.444 23.802 23.802 0.000186.055 47.314 49.175 25.699 19.303 12.716 31.847

Stage GatewaysPre-application 0Strategic fit assessment 1Outline Business Case (Programme 2Full Business Case assessment 3Contracting 4Delivery 5Project Completion 6Evaluation 7

TOTALLGF Allocation

Project Investment Decisions Forward Plan

Project Name Project SponsorFunding Request (m)

Total project cost (m) Stage

Funding allocation status Status

Kidderminster Railway Station (Growth Deal 1) Worcestershire CC £ 2.41 FBC Allocated

Project appraisal completed and awaiting final outstanding information on FBC prior to decision by LEP Director, now in September 2018 (slipped from June).

Snow Hill Public Realm (Growth Deal 1) BCC £ 4.66 £ 16.00 FBC Allocated Draft FBC submission delayed from March to August/September 2018.

National Memorial Arboretum Expansion

National Memorial Arboretum £ 0.50 £ 8.10 FBC Allocated LEP Director approved investment in August 2018.

University Station WMCA £ 10.00 £ 29.90 OBC NoneJuly 2018 LEP Board meeting referred decision to Programme Delivery Board. Project being considered at September 2018 PDB meeting.

Burton Town Centre Regeneration and Flood Defences East Staffs BC £ 3.00 £ 33.90 OBC None

OBC submitted April 2018 and undergoing clarification process as part of independent appraisal. Recommendation for decision by PDB via written procedure delayed from June 2018 and now expected September 2018.

Lichfield Southern Bypass Staffs County Council £ 2.30 £ 17.35 FBC Allocated

FBC needed updating and further appraisal following the Friarsgate, Lichfield project not proceeding. FBC appraisal now being finalised and anticipate a decision by the LEP Director in September 2018.

Fast Track Into Rail

Birmingham Metropolitan College (BMet) £ 0.03 £ 0.04 FBC None

Draft FBC submitted June 2018. Project being appraised and going through clarification process with the project. Expect revised FBC to be submitted September 2018.

A38 Bromsgrove Worcestershire CC £ 2.40 - OBC None

OBC independently appraised and approved by WLEP. Subsequent revision of preferred option due to budget constraints. Request by GBSLEP to project sponsor to update OBC prior to approval. OBC approval by LEP Director anticipated September/October 2018.

Future Skills Fund Programme GBSLEP £ 6.00 - OBC NoneIndependent appraisal has recommended further work on developing the OBC prior to funding decision. Timescales to be confirmed.

Churchfields Urban Village Wyre Forest DC £ 2.30 £ 5.70 FBC NoneInterim FBC expected August/September 2018 and final FBC February 2019.

The Junction Works Grand Union Studios £ 0.60 £ 2.35 OBC None

Independent appraisal concluded and recommended additional work be undertaken on the OBC prior to further review. Revised OBC due to be submitted October 2018.

Silverwoods Industrial Wyre Forest DC £ 2.04 - FBC None Finance Birmingham to engage with the project sponsor.

Commonwealth Games BCC £ 20.00 tbc OBC Allocated Anticipate OBC submission in September 2018.

Additions to the Strategic Pipeline

Project SponsorProject Sponsor Brief description of programme / project

Strategic Fit Priority Category (A-D)

GBSLEP funding amount requested (£)

Total programme cost (£)

Programme Theme

Date added to the Pipeline (Quarter-Year)

ASTUTEAston University

The project aims to support the development of Birmingham as a “Smart City” location, particularly East Birmingham, in order to promote sustainable economic development and attract future inward investment. It will help to tackle challenges and exploit the opportunities provided by the digital marketplace by supporting awareness raising, adoption and development of smart urban technologies. ASTUTE, a smart urban technologies centre of research and innovation, has been developed in partnership between the Aston University and the Recon Group UK Ltd who have promised £30m support.

B 15,000,000£ 45,000,000£ Creative, Cultural and Digital

Q2 2018

West Midlands DNA 5G

WMCA

The project aims to build a large scale national prototype of a 5G network 3-5 years before market led deployment is expected. This will enable the region’s key sectors to be at the forefront of innovation in digitally-enabled and data-driven connected business models and applications. The size and scale of the project will attract inward investment in the 5G Telecom sector to the region.

A 10,000,000£ 500,000,000£ Creative, Cultural and Digital

Q2 2018

Item 8

19 July 2018 1 of 1

GREATER BIRMINGHAM AND SOLIHULL LEP BOARD

13 September 2018

West Midlands Industrial Strategy

Purpose 1. This paper updates the LEP Board on progress in development of the West

Midlands Industrial Strategy and invites comment on the emerging draft for consultation.

Reasons for Exemption 2. In accordance with GBSLEP’s scheme of publication, this paper is exempted from

publication in accordance with Section 12A of the Local Government Act 1972, paragraph 3, as it contains

Information relating to the financial or business affairs of any particular person (including the authority holding that information)

Prepared by: Paul Edwards Head of Strategy, GBSLEP

Date Created: 5 September 2018

Item 9

19 July 2018 1 of 4

GREATER BIRMINGHAM AND SOLIHULL LEP BOARD

13 September 2018

Sector Delivery Plans for Advanced Manufacturing & Life Sciences – Progress Update

Purpose 1. This paper updates the LEP Board on progress against interventions set out in

the Sector Delivery Plans for Advanced Manufacturing and Life Sciences, as approved at LEP Board in March 2018.

2. Since July Board, the Executive have amended the reporting against Delivery Plans with the appendices list progress on a RAG rating basis.

Key Issues Life Sciences

3. The Delivery Plan for Life Sciences proposed LEP intervention in three areas of market failure where the LEP could add value. Progress against these areas has been strong to date:

4. Intervention: Gap fund infrastructure investment in pre-commercial specialist facilities, incubator and grow-on space including the proposed Precision Technologies Accelerator on the Life Sciences Park: • The University of Birmingham is developing an outline business case to the

LEP for Local Growth Funding support for the development of the Life Sciences Park to include an innovation hub including a Precision Technologies Accelerator (Phase One) and commercial start-up and grow-on space (Phase 2) – timescale for submission advised as January 2019

5. Intervention: Commission ‘scale-up’ support for med tech and digital health SMEs incorporating specialist diagnostic, brokerage and mentoring and consider the potential added value of developing clustering activity e.g. industry networking and events: • Life sciences industry engagement led by the LEP on behalf of the WMCA to

inform the development of the West Midlands Local Industrial Strategy has provided additional insight into industry support needs and barriers. This has informed the development by the LEP of a draft Sector Action Plan to underpin the LIS and work started with partners to scope a regional cluster offer for life sciences industry.

• The LEP has used its Growth Hub Development Fund to commission a ‘scale up’ focused specialist diagnostic and brokerage and support for life sciences

Item 9

19 July 2018 2 of 4

companies which is due to commence in October, and is refreshing its Growth Hub Knowledge Bank as regards life sciences.

6. Intervention: Support employer-led workforce development initiatives: • The LEP is working with the West Midlands Academic Health Science Network

(WMAHSN) (LEP Sector Skills Champion for life sciences and life sciences lead for the WMCA Productivity & Skills Commission) to bring forward a proposal for LEP Future Skills Capital Funding later this month for a digital & data skills centre of excellence. This will focus on developing apprenticeship pathways from Level 3 to higher level through collaboration between industry, NHS, HE, FE and schools as part of a proposed West Midlands Life Sciences Skills Academy, including centres of excellence for laboratory skills and medical engineering.

• The LEP is also working, in liaison with the WMAHSN, to identify and pursue opportunities to align the LEP’s skills interventions with life sciences industry opportunities and needs. This includes life sciences case studies in inspiration offers in schools and employer support materials, promoting the GBS Ladder, Skills for Growth Hub and Skills Training Responsiveness Fund to life sciences employers and exploring opportunities to pilot work readiness schemes with life sciences employers.

Advanced Manufacturing

7. The Delivery Plan for Advanced Manufacturing proposed LEP intervention in five areas of market failure where the LEP could add value with progress in these areas as follows:

8. Intervention: Implementation of integrated programme to inject enhanced leadership capabilities, developing the strategic capability of senior industrial mangers in the region Since the Delivery Plan was developed, a number of other programmes addressing leadership capabilities have come on stream;

• Productivity through People: The LEP, via the Growth Hub Development Fund, has approved funding for the ‘Productivity through People’ (PtP) programme, to be delivered by Aston University. PtP is a new national growth programme for SME leaders with a focus on businesses in the supply chain of major OEMs, and focuses on improving productivity through enhancing management practices and improving skills.

• Scale-up support: As part of the LEPs wider scale-up support offer, it is working with partners, including Aston University, to develop modules addressing leadership & management capabilities, this activity will also include running joint events with the ScaleUp Institute in Autumn 2018.

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19 July 2018 3 of 4

As a result, the Executive has paused this activity as the need is being met by other agencies.

9. Intervention: Working with the national Productivity Leadership Group (PLG) to develop an SME mentoring pilot for Manufacturing SMEs. SME senior leaders are matched with a mentor from some of Britain’s most successful organisations suited to give specific advice on the exact growth challenges they’re facing

• A pilot programme has been successfully delivered by GBSLEP Growth Hub since March 2018, with 11 mentors (from GSK, BAE Systems, Sharing in Growth and Siemens) and 11 mentees (leaders of local manufacturers in GBSLEP). Evaluation shows a high level of satisfaction from mentees. The pilot is due to finish in September 2018 and GBSLEP is leading the Midlands part of the national programme roll-out, titled ‘Mentoring for Growth’, which will commence in October 2018. The national programme will see 100+ mentors from the PLG businesses shared across four regions. The Midlands can expect 20-40 mentors, mentoring a cohort of 40-80 businesses. The national launch event will be held in Birmingham on 30th October.

10. Intervention: Design a framework around enhancing SME capabilities within

the local manufacturing supply chain for rail (working with an OEM and the Rail Alliance, as industry body)

• The LEP has worked with the Rail Alliance, as industry body, to develop a pilot

‘High Speed Mentor’ project. The project will take the structure and learnings from the successful nationwide mentoring project (Rail Mentor) and introduce SME suppliers to large top tier companies within the rail supply chain thereby increasing suppliers knowledge of their strategic direction and requirements so that they can increase their readiness to take advantage of the high speed rail contract opportunities, particularly HS2-related. Subject to approval and deployment of SEP Enabling Funds the pilot is due to commence in October 2018.

11. Intervention: Framework to expose selected tier 2 & 3 suppliers, who are

currently not engaging in Industry 4.0, to the benefits of digital and automation technologies

• The LEP is working with partner, Drive Midlands, in developing a series of

workshops based on key principles of adoption of digital and automation technologies into manufacturing (as highlighted in the recent report by Autodesk: Enabling the Art of the Impossible: How Britain can lead the 4th Industrial Revolution).

• Over the course of one year, the ‘course’ of workshops will take a group of selected tier 2 & 3 suppliers, not currently engaged with 4IR technologies, through practical workshops to better understand which technologies will be most beneficial to addressing their specific growth challenges. Workshops will take place in 2019.

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19 July 2018 4 of 4

12. Intervention: Local employers to collectively articulate mid-level training requirements and clearly identify gaps in the provision (Pilot framework in Aerospace sector)

• The LEP is working with Midlands Aerospace Alliance to engage directly with local businesses, both Top Tier and supply chain, to produce an in-depth look at mid-level skills requirements for the aerospace industry (with a particular focus on skills for innovation) and importantly map against local provision to portray gaps and provide a “big picture” of the local issues, as well as recommendations for key stakeholders, e.g. what might require curriculum change from training providers. This piece of work is intended to provide an exemplar template that could be applied across a range of sectors, as well as provide valuable insight for development of other projects such Institutes of Technology.

Recommendations

13. The Board is asked to note progress achieved to date and comment, as appropriate.

Prepared by: Paul Edwards Head of Strategy, GBSLEP


ADVANCED MANUFACTURING & ENGINEERING DELIVERY PLAN

3 Year Delivery Plan (2018/19-2020/21)

Proposed GBSLEP intervention(s)

Market failures/opportunities

Milestones Success measures Lead(s) and partners LEP Resources

Progress update – Sept 18 RAG

1. Implementation of integrated programme to inject enhanced leadership capabilities, developing the strategic capability of senior industrial mangers in the region, to innovate and exploit disruptive digital technologies (adoption of Industry 4.0)

To increase business engagement and investment in R&D and process & service innovation by addressing gaps in leadership and management capacity within our manufacturing supply chain

Pilot programme designed and launched by November 2018

Development of programme providing expert support, tailored to address specific leadership and management capabilities identified within manufacturing supply chain companies (particularly tier 2 & 3 suppliers) LEP support will enable a pilot programme to be delivered, where a gap has been identified, and provide a blueprint and evidence for development of a larger scale programme of support Increased level of investment in R&D and process & service innovation within the supply chain, leading to increased competitiveness and productivity. Enhanced support offering for SME manufacturers available via the Growth Hub.

Aston University: Lead partner, to design and deliver the programme, drawing on expertise from previous programmes To be integrated with the Growth Hub support offering to manufacturers – jointly badged with the University.

The LEP: contribution of revenue funding (suggested £100,000) to pilot programme and provide template for scaled up programme

Since the Delivery Plan was developed, a number of other programmes addressing this intervention have come on stream; Productivity through People: The LEP, via the Growth Hub Development Fund, has contributed funding to the national ‘Productivity through People’ (PtP) programme, being delivered in our area by Aston University. PtP is a new growth programme for SME leaders with a focus on businesses in the supply chain of major Tier 1 companies, and focuses on improving productivity through enhancing management practices and improving skills. The first cohort of the programme will run from October 2018 to September 2019 and will involve 24 business leaders. Scale-up offer: As part of the LEPs wider scale-up support offer, it is working with partners, including Aston University, to develop modules addressing leadership & management capabilities, this activity will also include running joint events with the ScaleUp Institute in Autumn 2018. It is therefore the view of the Executive to pause this activity as the need is being met by other agencies.

GREEN ⃝ ⃝ ⃝

2. Working with the national Productivity Leadership Group (PLG) to develop an SME mentoring pilot for Manufacturing SMEs. SME senior leader matched with a mentor from some of Britain’s most successful organisations suited to give specific advice on the exact growth challenges they’re facing

Limited growth aspirations constrain productivity and growth of tier 2 and tier 3 suppliers

SME mentoring pilot launched 14th March 2018 and due for completion in September 2018 National programme roll out October 2018

Successful completion of PLG mentoring pilot with 11 SMEs, and minimum of 70% of mentees found the mentoring relationship valuable Mentees have begun to implement changes, leading to increased productivity/competiveness and business growth Enhanced engagement with and understanding of SME growth challenges obtained within the LEP West Midlands, led by GBSLEP, to be one of two regions for the first stage of National roll out of programme by BEIS, from October 2018 Enhanced support for SME manufacturers in the region to be able to address specific growth challenges

Productivity Leadership Group (PLG): To provide high quality mentors from some of the UKs most productive companies with significant experience in implementing business change, and to have overall oversight of the programme The LEP: To identify suitable SMEs to participate in the pilot, and match to most appropriate mentor. Also manage GBS programme throughout the 6 month duration For National Roll Out: PLG:As above, to provide senior high quality mentors The LEP: GBSLEP Growth Hub to lead the roll out across the West Midlands, this may require part funding for one FTE (via Growth Hub)

In consultation with Productivity Leadership Group, the LEP Executive will identify resources to enable roll out of national programme. Aim will be to secure external funding.

Pilot Programme: A pilot has been successfully running since March 2018, with 11 mentors (from GSK, BAE Systems, Sharing in Growth and Siemens) and 11 SME mentees. Monthly evaluation shows a high level of satisfaction from mentees. The pilot is due to finish in September 2018, when a full evaluation will be completed. Indicators show 90%+ of mentees found the relationship valuable.

National Rollout: GBSLEP is leading the Midlands region for the National Rollout of the programme, titled ‘Mentoring for Growth’, which will commence in October 2018. The national programme will see 100+ mentors from the PLG businesses shared across four regions. The Midlands can expect 20-40 mentors, mentoring a cohort of 40-80 businesses. The national launch event will be held in Birmingham on 30th October, with the support of Be the Business, and BEIS. The programme will be managed by Aston University, who were successful in a Growth Hub Development Fund bid, which includes managing the Mentoring for Growth programme for the first 12 months.

Future funding models beyond these initial 12 months are also under consideration.

GREEN ⃝ ⃝ ⃝

3. Working with an OEM and the Rail Alliance, as industry body, to design a framework around enhancing SME capabilities within the local manufacturing supply chain, to:

i. Build on the investment from HS2 and convergence of advanced manufacturing disciplines to boost supplier investment confidence

ii. Increase knowledge within the local supply chain on the strategic direction of OEMs and Tier 1’s in relation to major projects;

For example: Prime/Tier 1’s bidding for/won HS2 contracts, to work with a selected number of local suppliers to improve their competitiveness

Lack of investment in equipment and innovation due to suppliers not understanding customer requirements

Programme scoped by August 2018 Project requirements defined with partners by October 2018

LEP enables local manufacturers to benefit from a tailored programme of export support SME enhanced opportunity to shape a product to the needs of a Top Tier company in a supportive environment. SMEs focusing of resources on a clearly defined target, leading to increased confidence to invest in innovation Increased local SME content within rail contracts Enhanced understanding of fitness for rail amongst manufacturing supply chain, enabling diversification into rail for manufacturers who may not yet supply into the rail industry

The LEP: Contribution around expert understanding of available support programmes locally, that is unlikely to be understood by industry Top Tier companies Rail Alliance: Expertise on enhancing capabilities of rail supply chain, particularly around the Rail Mentor programme

Potential for a small amount of revenue funding to increase delivery capacity.

High Speed Mentor: A project has been developed with the Rail Alliance, and with engagement with two major Tier 1 companies, due to commence October 2018 The project will introduce small and medium companies to large top tier companies within the rail supply chain, to improve the resilience of the supply chain by enhancing the presence and contribution of SME’s in the region. It will take the structure and learnings from the successful nationwide mentoring project (Rail Mentor) and adapt it to meet the requirements of GBSLEP. This pilot project is designed to enhance SME capabilities within GBSLEP relevant manufacturing sectors, increase knowledge of the strategic direction and requirements of the top tier of the rail supply chain and increase the readiness of local suppliers to take advantage of the projected investments/spends projected by High Speed rail and HS2 in particular. The programme, devised and delivered by Rail Alliance (RA) will have a target of 100 companies assessed within the process by end February 2019 and 10 companies identified for introduction to top tier Rail Supply chain members and in depth, Rail Industry specific, mentoring by Oct 2019.

GREEN ⃝ ⃝ ⃝

4. Defined framework to expose selected tier 2 & 3 suppliers, who are currently not engaging in Industry 4.0, to the benefits of digital and automation technologies SME exposure to regional demonstrators to promote the benefits of Industry 4.0

To increase adoption of digital and automation technologies (industry 4.0) amongst manufacturers by engaging suppliers who are currently not aware of Industry 4.01

Partners identified and programme scoped by June 2018 Programme designed and ready to be launched by November 2018

Improved utilisation of existing assets and demonstrators to engage Tier 2 & 3 suppliers to Industry 4.0. Programme delivered with an expert partner, leading to: Increased awareness amongst the local manufacturing supply chain of Industry 4.0 and understanding of the benefits SMEs beginning to use Industry 4.0 to accelerate operational improvements Businesses understand which technologies will be most beneficial to addressing their specific growth challenges and are better equipped to evaluate the benefits of individual Industry 4.0 technologies in a particular context and decide which to implement first Increased confidence to begin to implement Industry 4.0, for tangible advantages

Suggested: HVM Catapult: Particular expertise in supporting businesses to prepare for the opportunities and challenges arising from Industry 4.0. EEF: EEF Technology Hub has capacity to deliver world class technical and leadership skills in Industry 4.0 The LEP: involvement in development of proposals with partners and alignment with Growth Hub support offer for manufacturers. The LEP/Growth Hub can play an important role in driving manufacturers to a programme, via their interactions around support diagnostics, as most of these businesses would not otherwise engage with the assets.

Potential resources required tbd.

Through discussions with partners, Drive Midlands has agreed to be lead partner with GBSLEP, in developing a series of workshops based on key principles of adoption of digital and automation technologies into manufacturing, highlighted in the recent report by Autodesk: ‘Enabling the Art of the Impossible: How Britain can lead the 4th Industrial Revolution’, which Drive Midlands have formally endorsed. The intention is that over the course of one year, the series of workshops will be delivered in the form of a ‘course’, taking a group of selected tier 3 suppliers, not currently engaged with 4IR technologies, through practical workshops to better understand which technologies will be most beneficial to addressing their specific growth challenges. Workshops designed by December 2018. Workshops will take place through 2019.

AMBER ⃝ ⃝ ⃝

1 56% of a survey of 320 engineers cross-industry had little or no understanding of the term “Industry 4.0”. Just 8% had a significant understanding (Source: IMeche and BDO survey on Industry 4.0, July 2016) yet 62% of manufacturers agree that they could be using digital technologies more to boost their productivity. (Source: EEF survey of members’ views of 4IR, 2016)

5. Pilot framework in Aerospace sector - Local employers to collectively articulate mid-level training requirements and clearly identify gaps in the provision.

Sector skills needs are currently poorly articulated by some of our key sub-sectors

Key local employers agreement to participate and brief agreed by May 2018 Needs articulated by summer 2018 (in line with IoT business case) and shared with training local training providers Provider responses by November 2018

Sector training needs will be clearly identified by industry, and will provide an exemplar framework that can be taken forward in other sub-sectors Results driven into the implementation of the Institute of Technology as a route to training provider engagement; identified gaps and needs will be put forward to providers to respond to Training providers more easily able to respond to clear articulation of gaps (technical and behaviours skills) Training provision for local supply chain is strengthened Local workforce become more highly skilled and specific industry requirements

Midlands Aerospace Alliance: supports and represents the aerospace industry across the Midlands region. Providing a trusted voice to engage and convene industry participation. The LEP: To drive forward the activity. Without LEP intervention, this activity is unlikely to happen. LEP to convene local training providers.

Potential for a small amount of revenue funding to increase delivery capacity.

Due to executive capacity constraints arising from work on Local Industrial Strategy, there has been delay in moving this intervention forward. Further discussions with partners have also led to slight shift in the scope of the intervention. Progress to date: Midlands Aerospace Alliance have put forward a proposal to the SEP Enabling Fund. The project will engage directly with local businesses, both Top Tier and supply chain, to produce an in-depth look at mid-level skills requirements for the aerospace industry (with a particular focus on skills for innovation) and, importantly, map against local provision to portray gaps and provide a “big picture” of the local issues, as well as recommendations for key stakeholders, e.g. what might require curriculum change from training providers. This piece of work is intended to provide an exemplar template that could be applied across a range of sectors, as well as provide valuable insight for development of other projects such as Institutes of Technology. Delivery of this project is anticipated to commence in Q1 2019.

AMBER ⃝ ⃝ ⃝

Advanced Manufacturing Delivery Plan Update – Sept ‘18 Skills: • Productivity through People – part-

funded programme enhancing management practices and improving skills of SME business leaders

• Aerospace skills ‘gaps analysis’ – Pilot project scoped

Growth Aspirations : Mentoring for Growth – successful pilot completing in September 2018, with 11 GBSLEP manufacturers GBSLEP leading the Midlands for national rollout of Mentoring for Growth, one of the first 4 regions to benefit. Launching October 2018.

Supply Chain Competitiveness: • High Speed Rail – framework

enhancing SME capabilities within the local manufacturing supply chain designed

• Programme for tier 2 & 3 suppliers, not engaging in 4IR technologies – scoping underway

Version 2 - 30.08.18

1

GBSLEP LIFE SCIENCES 3 YEAR DELIVERY PLAN 2018-2021 – PROGRESS UPDATE SEPTEMBER 2018


‘Market failure’

Deliverables / Milestones

Outcomes / Success Measures

Key Partners

LEP Resources


1. Gap fund infrastructure investment in pre-commercial specialist facilities, incubator and grow-on space that will strengthen and address gaps in the ecosystem to support inward investment, business formation (spin-out, start-up) and growth thereby delivering economic impact e.g. the Precision Technologies Accelerator and development of incubation and grow-on space on the Life Sciences Park.

Expansion Bottlenecks: Limited supply of pre-commercial specialist facilities, incubator and grow on space

Infrastructure development priorities to strengthen the innovation ecosystem identified via the Local Industrial Strategy process by September 2018. Funding secured for the Precision Technologies Accelerator (including LGF as required) in 2018 and PTA developed in 2019. Investment secured to develop additional specialist facilities, incubation and grow on space to stimulate and fulfil industry demand with public sector gap funding secured as required – TBC

Precision Technologies Accelerator developed on the Life Sciences Park and attracts private sector industry investment including in new company formation (spin-out / start-up) and growth - supported by provision of incubation and grow-on space. Supply of specialist facilities, incubation and grow on space in place to stimulate and meet current and future industry demand.

University of Birmingham Universities, Science Parks

Existing LEP Executive resource Local Growth Funds through Growth Deal 3 Future growth funding (capital & revenue)

Needs analysis & prioritisation: GBSLEP-led development of the WM Local Industrial Strategy Life Sciences Sector Action Plan has confirmed the priority for developing the visibility and profile of the WM life sciences “cluster” with the Life Sciences Park opportunity identified as a flagship development. Wider infrastructure needs and priorities yet to be defined although expected to be informed by work currently being commissioned by Birmingham City Council to inform the development a Master plan for Selly Oak – due to be completed by end 2018 Life Sciences Park/Precision Technologies Accelerator (PTA): Outline business case for LGF being developed by the University of Birmingham. Two phases of development are proposed: Phase One: development of an innovation hub including a Precision Technologies Accelerator and Phase Two: development of commercial space for innovative life sciences businesses including high quality lab/office space for new start-ups and grow-on space - target submission date of OBC to the LEP of January 2019

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2a) Commission “scale-up” support for med tech and digital health SMEs incorporating specialist diagnostic and brokerage and mentoring that will encourage and support companies to develop and progress their growth plans, and to navigate market and ecosystem complexity.

Unrealised potential for company growth – particularly med tech and digital health – e.g. due to limited Industry aspirations & investment, market and ecosystem complexity

Relevant support mapped against industry needs and gaps identified – June 2018 Specialist diagnostic, brokerage in place with clear referral routes – September 2018 Growth Hub Knowledge Bank, advisors and referral kept up to date – September 2018 and ongoing Gaps in support commissioned and in place – TBC subject to future funding

Targeted scale up support offer for med tech and digital health SMEs in place and effective in identifying and supporting companies to develop and progress their growth plans including clustering activities as appropriate and aligned Growth Hub provision – resulting in higher rates of company spin-out, start-up and growth

Chamber Medilink WM West Midlands Academic Health Science Network West Midlands Growth Company Birmingham Health Partners Universities Intellectual Property Office Department for International Trade Midlands Engine Investment Fund Managers NHS

SEP Enabling Fund Future growth funding Approximate initial funding of £60,000 per annum to support dedicated scale-up life sciences support.

Industry support needs & gap analysis: GBSLEP-led life sciences industry engagement to inform development of the Local Industrial Strategy has identified unmet industry demand for more signposting and supported pathways to accessing the regional ecosystem including more collaboration and networking opportunities. Barriers around NHS market access, skills and access to finance (£0.5m-£2m) have also been identified. Specialist diagnostic & brokerage: GBSLEP is using its Growth Hub Development Fund to commission ‘scale up’ focused specialist diagnostic and brokerage and support for life sciences companies – currently at full business case stage before contracting can take place.

Growth Hub Knowledge Bank: GBSLEP is refreshing its Growth Hub Knowledge Bank offer including as regards life sciences advice. Access to finance: Work to develop the Growth Hub access to finance offer includes work to promote finance opportunities including the Midlands Engine Investment Funds and to increase access to angel investors via the development of an Angel Investment Hub. Discussions are also taking place with the WM lead for the Midlands Innovation Research Commercialisation Accelerator

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2b) Explore the potential added value of a cluster development and support offer that can be integrated with the Growth Hub and commission delivery as appropriate

As above

Added value of a cluster development and support offer established and commissioned as appropriate.

As above

As above

As above

around opportunities to develop support for SMEs to attract investment using HEIP - target completion March 2019 NHS market access/procurement: GBSLEP is leading on the development of the WM Local Industrial Strategy as regards life sciences through stakeholder, including industry engagement. Industry needs around NHS market access (particularly procurement barriers) have been highlighted. GBSLEP to work with partners to define potential solutions – target completion March 2019 Cluster development and support offer: GBSLEP-led industry engagement on behalf of the WMCA as part of the LIS development has confirmed the potential added value of developing some type of “cluster” activity to develop the WM life sciences cluster and offer to industry to build on the region’s ecosystem strengths and gaps identified by industry including clearer pathways for companies (particularly early stage), more opportunities for facilitated collaboration and networking including around workforce development, export and investment attraction. GBSLEP to lead on scoping work with partners – target completion end 2018 for commissioning, subject to resource, in Q1/2 2019.

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3. Support employer-led workforce development initiatives to upskill the existing workforce to meet current technical requirements and to overcome technical skills shortages in the supply of talent. This includes working with HE, FE, NHS and private sector industry partners (including Medilink WM) to develop, and support, as appropriate and subject to available capital and revenue funds, the Life Sciences and Healthcare Academy Proposal and other employer-led proposals.

Needs analysis & intervention planning: GBSLEP-led industry engagement on behalf of the WMCA as part of the LIS development has identified digital skills development needs at all levels plus barriers to securing talent linked to under development of the region’s life sciences cluster and potential opportunities to increase HE-industry engagement around workforce development. Scope for further industry engagement around skills needs and interventions required - scoping by target of end 2018 WM Life Sciences Academy: GBSLEP is working with the WMAHSN (as lead for WMCA Productivity & Skills Commission for life sciences) to bring forward a proposal for LGF Future Skills Capital Fund in September for a digital & data skills centre of excellence focused on developing apprenticeship pathways from Level 3 to higher level through collaboration between industry, NHS, HE, FE and schools as part of a proposed WM Life Sciences Skills Academy also including centres of excellence for lab skills and medical engineering. GBSLEP skills interventions: GBSLEP is engaging with WMAHSN to identify to target its skills interventions at the sector including: Inspiration: - to promote the GBS Ladder campaign at

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life sciences employers – end Q3 18/19 - to identify life sciences case studies and materials for inclusion in inspiration activities in schools including ‘digital skills labs’ - end Q3 18/19 - to identify opportunities to incorporate sector representation in careers and enterprise provision in schools - end Q3 18/19 Employer support: - to promote the anticipated Skills for Growth Hub and Skills Training Responsiveness Fund to life sciences employers – date subject to DWP approval of ESF bid - to include life sciences employer case studies in employer support prospectus - Sourcing talent: to scope opportunities to explore new ways of sourcing talent e.g. as part of clustering activity – end 18/19 Work-readiness: to scope potential pilot life sciences targeted scheme – end 18/19

Life Sciences Delivery Plan Update – Sept ‘18 Infrastructure development:

• Life Sciences Park - outline business case for LGF expected Jan ‘19

• Wider infrastructure needs - Birmingham City Council Selly Oak master plan commission (current)

Skills:

• Life Sciences Skills Academy – Future Skills Capital (LGF) bid under development

• LEP skills interventions being aligned to industry needs

Business support & cluster development:

• Specialist diagnostic and brokerage – Growth Hub Development Funds approved

• Cluster development – scoping underway

Local Industrial Strategy

• Stakeholder and industry engagement - held

• Sector Action Plan – draft in place

• WMCA consultancy commission – underway

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GREATER BIRMINGHAM AND SOLIHULL LEP

BOARD MEETING

13TH SEPTEMBER 2018

REGIONAL ENERGY STRATEGY

Purpose 1. This paper updates the Board on progress in developing a Regional Energy

Strategy and seeks the Board’s endorsement before submitting a final version to the WMCA Board.

Recommendations 2. The LEP Board is asked to endorse the attached final version of the Regional

Energy Strategy. This sets out a framework within which the WMCA should work to deliver devolved powers and finance to GBSLEP and member authorities to support local energy infrastructure investment and strategic planning.

Background 3. During 2017-18 GBSLEP joined with BCLEP and CWLEP to develop a

regional energy strategy. 4. This work was funded by BEIS, and further supported financially and through

complementary initiatives by the University of Birmingham, the Energy Systems Catapult, the University of Warwick, and Climate-KIC.

5. Development of the strategy was co-ordinated by Energy Capital, a regional public-private partnership chaired by GBSLEP. This Board agreed to part-fund Energy Capital for 2018-19 at a previous meeting. Energy Capital commissioned Arup and Aecom to carry out technical and economic studies, and the University of Birmingham convened a Regional Energy Policy Commission chaired by Sir David King.

6. The draft Regional Energy Strategy was published on 28 March 2018, alongside the report of the Regional Energy Policy Commission. Launch events were held in Birmingham and London, and separate stakeholder consultation events for the strategy took place in Sandwell and Birmingham in March and May.

7. The draft strategy was made available for public consultation until May 21, and detailed responses were received from multiple sources including Solihull Council, HS2, private individuals and small businesses. It has also been presented to the WMCA SEP Board and the BCLEP Board.

8. These responses have all been incorporated in the final version (attached). They were all broadly positive, with the major changes being increased recognition of the important role of housing in generating demand for energy (and ways to manage this) and a more explicit statement of the need for appropriate levels of resourcing if a sensible strategy is to be delivered.

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Key points and issues 9. Energy matters to the West Midlands Region and GBSLEP in particular.

Economic development depends on easy and efficient access to power and heat supplies; clean air is an outcome of energy choices for transport in particular; and the energy performance of existing and new housing can affect the quality of life and economic capacity of large tranches of the population. For example, in several parts of Birmingham and North Solihull more than 12% of households are in fuel poverty, which means they cannot afford to heat their homes to a civilised and healthy level of comfort without pushing their family below the poverty line.

10. As a region we spend over £6.7bn a year on fuel and power (of which about 50% is allocated costs of historic infrastructure investments) and a further £1.25bn on new energy infrastructure investments such as pipes, wires and transformers. Energy is seen as key to the local industrial strategy: energy infrastructure will affect the capability to roll out developments and electric vehicles across the region, for example.

11. Currently, energy infrastructure cost allocation decisions and strategic planning of energy infrastructure are almost exclusively determined nationally. While this made sense in the late 20th century, it does not in the 21st. Modern energy infrastructure is increasingly localised and distributed and (rather like transport infrastructure) a degree of regional knowledge and sensitivity is required to secure optimal economic outcomes.

12. The Regional Energy Strategy therefore proposes the WMCA seek to secure significantly greater local powers and control over regional energy infrastructure investment, strategic planning and cost allocation, and pass these powers on to member local authorities through a mechanism called Energy Innovation Zones (EIZs).

13. EIZs are controlled by sponsoring local authorities and enable flexible powers to be devolved, suited to the local economic circumstances, geography and politics of each area. The WMCA provides support in identifying relevant powers and regulatory flexes and in securing large scale investment funds to be applied in support of the EIZs.

14. Four pilot EIZs were identified during development of the strategy and a fifth (Rugeley) is now under discussion. Two (three with Rugeley) of these are within GBSLEP: one centred on Tyseley Energy Park in Birmingham and one at UK Central in Solihull.

15. Delivery of the energy strategy will be governed by the Energy Capital Board, which reports to the SEP Board within the WMCA. GBSLEP has provided some funding for Energy Capital during 2018-19 alongside industrial, academic and third-sector partners, the WMCA and the other two LEPs. We have three seats on the board (including the chair).

16. From 2019-20, the Regional Energy Strategy is proposing that the WMCA seeks to secure both a substantial investment fund (£500M) for regional energy infrastructure investment and sufficient operating budget to support the emerging EIZs and fund management effectively (likely to be of the order of £5M a year). The LEPs and constituent members will be consulted on the details of any regional resourcing required.

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Conclusion

17. Energy infrastructure is an area of significant opportunity globally, nationally and locally, where the LEP and region can make a tangible difference to partner delivery capability and to individual citizen’s lives.

18. The Regional Energy Strategy is the outcome of several years’ discussion and partnership working. It provides a sensible basis for progress; sets an ambitious target for the WMCA to deliver for its members and the region, and ensures LEPs and LAs retain governance and control over their own geographies. It positions the West Midlands as a leader in this sector and supports a much wider range of economic, social and environmental goals.

Prepared by: Matthew Rhodes

GBSLEP Board Member and Chair, Energy Capital [email protected]



A Regional Energy Strategy for the West Midlands

March 2018

Final version

(incorporating

consultation

responses)

July 2018

Acknowledgements

Funding and support for this work has been provided at various times by BEIS, the University of Warwick,

the University of Birmingham, the Energy Systems Catapult, Climate-KIC, and the three Local Enterprise

Partnerships of the Black Country, Greater Birmingham and Solihull, and Coventry and Warwickshire.

Key local stakeholders also gave freely of their time and knowledge through the Energy Capital partnership

and in many one-to-one discussions, and the support and contributions of Birmingham, Coventry, Solihull,

Wolverhampton, Dudley, Sandwell and Walsall and Warwickshire Councils; National Grid, Western Power

Distribution, Severn Trent Water, Cadent, Jaguar Land Rover, Webster and Horsfall, Sustainability West

Midlands, Aston University, Ecuity Consulting, and Westley Group are particularly appreciated.

We are also indebted to all the organisations and individuals who responded to the consultation exercise

and attended stakeholder events (see appendix III). Your input was all digested and appreciated and has

been reflected as far as practical in this final version.

Table of Contents

Executive Summary ........................................................................................................... 1

1. Introduction ................................................................................................................ 4

2. The West Midlands ..................................................................................................... 6

History, geography and political context.............................................................................. 6

Key local stakeholders .......................................................................................................... 7

3. Economic opportunity ................................................................................................. 9

Energy in the West Midlands Economy ................................................................................ 9

Investment flows................................................................................................................ 14

Economic activity ............................................................................................................... 15

Carbon emissions and environment................................................................................... 16

Specific regional opportunities and needs ......................................................................... 17

Global markets ................................................................................................................... 22

4. Challenges and constraints........................................................................................ 24

The speed and nature of technological change and choice in energy systems .................. 24

Customer engagement in energy markets ......................................................................... 25

Narrow definitions of innovation ....................................................................................... 25

Diversity of local ambitions ................................................................................................ 27

Complexity of political institutions and public sector capacity .......................................... 27

Existing industrial strengths ............................................................................................... 28

A mismatch between regulatory system design and market opportunities ....................... 28

5. Our regional energy strategy ..................................................................................... 31

Overview and principles ..................................................................................................... 31

Objectives and vision ......................................................................................................... 32

Anticipated projects and pipeline - who picks the winners (and losers)? .......................... 33

Energy Innovation Zones .................................................................................................... 34

Wider initiatives, including cluster development and business support ............................ 35

Roles and responsibilities ................................................................................................... 37

Funding, governance and resourcing ................................................................................. 38

Relationship to other regions ............................................................................................. 40

6. Global best practice .................................................................................................. 41

UK examples ...................................................................................................................... 41

International examples ...................................................................................................... 42

7. Next steps ................................................................................................................. 43

West Midlands Regional Energy Strategy July 2018

Appendix I – Sub-regional mapping reports ..................................................................... 45

Appendix II – Pilot Energy Innovation Zones and Investment Cases ................................. 49

Black Country ......................................................................................................................... 50

Coventry and Warwickshire ................................................................................................... 53

Tyseley and Birmingham ........................................................................................................ 55

UK Central .............................................................................................................................. 57

Appendix III – Consultation responses and attendees at stakeholder engagement event . 59

References ....................................................................................................................... 61

Table of Figures

Figure 1 West Midlands Regional Energy Strategy governance ............................................................ 3

Figure 2 Overview of energy strategy workstreams ............................................................................. 5

Figure 3 The West Midlands Combined Authority geography .............................................................. 6

Figure 4 GVA in 2015 and growth 2010-15 for West Midlands LEPs and those of other regions. ......... 7

Figure 5 The West Midlands energy economy ...................................................................................... 9

Figure 6 Commercial energy costs compared internationally ............................................................. 10

Figure 7 Split of electricity costs for a medium-sized West Midlands manufacturer .......................... 11

Figure 8 International comparison of electricity prices....................................................................... 11

Figure 9 West Midlands energy use by fuel vector (2015) .................................................................. 12

Figure 10 Comparison of West Midlands’ energy use by sector and spend by sector ........................ 13

Figure 11 West Midlands annual investment flows - energy .............................................................. 15

Figure 12 West Midlands Industrial Strategy Framework ................................................................... 17

Figure 13 Historic growth of distributed generation in the West Midlands ........................................ 20

Figure 14 Projected future distributed generation investment in the West Midlands to 2030 .......... 21

Figure 15 How costs of energy technologies can fall rapidly .............................................................. 22

Figure 16 How the UK energy market is structured ............................................................................ 29

Figure 17 Energy Innovation Zones schematic (courtesy Dr Gavin DJ Harper) ................................... 34

Figure 18 Impacting GVA through regional energy strategy ............................................................... 35

Figure 19 Access to international best practice networks via Climate KIC .......................................... 36

Figure 20 West Midlands Regional Energy Strategy governance ........................................................ 38

Figure 21 High level strategy implementation timeline ...................................................................... 43

Figure 22 GBSLEP energy network opportunities ............................................................................... 46

Figure 23 Sample heat and power demand map ................................................................................ 47

Figure 24 Energy from waste opportunities in the Black Country ....................................................... 47

Figure 25 Private wire opportunities in the Black Country ................................................................. 48

Figure 26 Typical large-scale solar opportunity in the Black Country ................................................. 48

Figure 27 Breakdown of electricity charges for a large regional manufacturing business, 2017. ....... 50

Figure 28 International comparison of electricity prices of energy intensive industries, 2015. .......... 51

Figure 29 Proposed Coventry and Warwickshire EIZ........................................................................... 53

Figure 30 UK Central Hub .................................................................................................................... 57

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Executive Summary

Between 2018 and 2030, more than £15bn will be invested in local energy projects across the three

LEPs of the West Midlands, and £74bn will be spent on products and services (like cars and homes)

where the quality of local energy systems will make the difference between global competitiveness

and economic failure for our local industries, and between lives dominated by energy poverty or

supported by comfortable and efficiently heated homes for our citizens. A further £80bn will be

spent on fuel and power to drive our industry and to power those same homes and cars.

Vision

This strategy is about influencing these financial flows to deliver a vision for energy across the region

by 2030 which includes:

• reducing energy costs for our strategic industrial sectors to at least match those of our

international competitors;

• reducing the incidence of fuel poverty across our region by hitting current government

targets for energy efficient housing five years ahead of schedule;

• delivering the West Midlands’ share of national and global carbon budgets by reducing

regional carbon emissions;

• creating a regional energy infrastructure that adds £1bn to GVA by 2025 by putting the

region at the leading edge of the global energy and transport systems transition.

Specific, measurable targets for each of these objectives are set out in section 5.

Innovative and selective delivery mechanisms

We will deliver these targets through highly selective investment of public and private capital,

working through a framework of Energy Innovation Zones (EIZs) developed alongside this strategy.

EIZs create local partnerships which bring together the right stakeholders for each locality and are

thus collectively able to manage energy investment risk efficiently (particularly when innovative

technologies are being commercialised or require strategic infrastructure investment).

Unique regional ambitions and history

This idea was developed in the West Midlands and is designed to work for the particular diversity,

strengths and heritage of our region. The West Midlands would simply not exist as a population and

industrial centre if it were not for the world-class energy infrastructure and assets uniquely available

here and matched to our industrial and innovative capabilities from 1750 onwards.

The West Midlands of today is very different from that of the 18th to 20th centuries, but energy

remains critical to our key sectors and to our citizens. This energy strategy is a key element

underpinning a local industrial strategy focused on the digital, health and life sciences, and clean

growth opportunities of the future. It targets a massive global clean growth opportunity which is

aligned with national industrial strategy and which this region is particularly well-positioned to

exploit.

We have specific regional issues around fuel poverty (the quality of our housing stock); diversifying

and creating new markets for our exceptional industrial and manufacturing base; and making best


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use of the imagination and creativity of our innovators and academic institutions. This strategy

recognises and responds to all these issues.

Contributing to national challenges and needs

However, this strategy has been developed against the backdrop of a fundamental transition in

global energy systems which is widely recognised and is creating challenges and opportunities at

both global and national level. Effective regional leadership in energy is key to responding to these

challenges. This strategy sees the West Midlands contributing constructively to changing the way

energy is regulated and managed nationally, working with other devolved regions and authorities

across the UK.

Financial implications and approach

Four pilot EIZS have been identified and preliminary investment cases developed for this strategy.

These EIZs will act as a focus for energy systems investment of between £270M and £490M over the

next 15 years and deliver the first £200M of the £1bn GVA target. The remaining £800M will be

delivered through a range of initiatives including:

• additional Energy Innovation Zones;

• strategic infrastructure support for accelerated new market development of locally sourced

products such as electric vehicles and smart connected and low carbon housing;

• seeking to establish a legacy bank to cover sunk costs of stranded and legacy energy

infrastructure assets, using this to reduce energy costs for innovative and competitive

manufacturers;

• energy efficiency programmes for manufacturing and residential sectors;

• simplifying access to and improving transparency of energy markets for business customers;

• more rigorous and targeted new build housing energy efficiency standards;

• large-scale retrofit programmes for fuel poor households and energy-inefficient housing;

• a focused cluster support programme including incubation of clean technology businesses

and specialist energy support for established businesses, working with regional and

international partners.

We propose to establish a £500M specialist regional investment fund to support these initiatives.

The strategy will be delivered through Energy Capital, established with a governance structure

shown in Figure 1 (also see section 5). Individual EIZs will be controlled and run by their local

authorities.

Detailed delivery plans and timescales are set out in accompanying reports covering EIZs, including

Energy as an Enabler of Industrial Strategy across the region and which is summarised in section 7.

The immediate priorities are:

1. To establish an initial Energy Capital executive team within the WMCA to support the Board

and funding commitments made by partners. This will be done in two stages: an interim

development team will be put in place for 2018-19, and permanent resource will be

recruited into the WMCA from 2019-20 onwards.

2. To follow through on the recommendations of the Regional Energy Policy Commission,

particularly around working with government and regulators to detail the legal implications

and requirements for EIZs.


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3. To work with regional and wider partners to develop a cross-sectoral and place-based ‘Deal’

for the West Midlands’ new energy economy1. This will act as the initial focus for securing

the required investment funding.

Figure 1 West Midlands Regional Energy Strategy governance

1 This is being taken forward as part of the Local Industrial Strategy.


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1. Introduction

This strategy is a consolidation of more than a year’s work across the West Midlands to bring

together existing energy mapping and strategy work, fill in gaps and develop a strategic framework

to support delivery of the region’s ambitions and needs. It is intended as a response to BEIS’s

request that the three LEPs within the West Midlands Combined Authority (WMCA) produce a single

high-level strategy summarising how they will work together through Energy Capital to deliver

shared objectives.

Throughout the work we have maintained a fundamental principle that the strategy will not lead to

replication or duplication of existing work, initiatives or institutions. The intention is to create a

strategy which builds on and supports these activities where they are already underway and makes

it easier for local leaders and projects to deliver their specific objectives around energy. This point is

expanded on in later sections.

This document should be read as an overview document and strategic framework. It does not

attempt detailed energy mapping and street-by-street analysis of housing energy performance

across our major conurbations, nor contain maps of energy distribution networks, for example. This

is for three reasons: firstly because this would have been very costly and time consuming and

potentially prevented us completing this strategy (and carried the risk of losing sight of the wood for

the trees); secondly because for a region the size of the West Midlands it would have almost

certainly been out-of-date by the time it was finished and impossible to maintain at regional level

without considerable ongoing resourcing; and thirdly because most of this data is already held and

maintained effectively at local level by different organisations who are typically best placed to

maintain the datasets efficiently and cost-effectively. The strategic challenge is not collating the data

centrally, it is putting in place effective and strong local partnerships and governance structures to

ensure that the data are used and available as effectively and efficiently as needed. This is the

approach we are taking in the West Midlands.

Energy Capital itself inherited a strong partnership from the Birmingham Green Commission led by

Councillor Lisa Trickett and the work of its energy group, chaired by Professor Martin Freer. The

strategy has been made possible by the willingness of this group to combine with the strong sense of

purpose coming from the Black Country LEP, where energy is championed by Tom Westley, and the

vision of Coventry and Warwickshire, who are engaging creatively with the energy challenge as their

traditional core transport and manufacturing businesses see new global opportunities rapidly

opening in front of them.

The strategy should be read in conjunction with other key documents produced alongside or as part

of the regional energy strategy, specifically:

• Powering Growth: Black Country Energy Strategy Final Report (Aecom, February 2018)

• Business Cases for Energy Innovation Zones in the West Midlands (Arup, March 2018)

• Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation (Regional

Policy Commission on Energy, March 2018)

• Energy as an Enabler: Linkages between regional energy strategy, productivity and growth

(Black Country LEP and Matthew Rhodes, March 2018)


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• Distributed generation and demand study. Technology growth scenarios to 2030, Regen for

WPD (January 2018)i

Several sections of this strategy draw heavily on the work done for these reports and the reports

themselves. The work of their authors and the conversations and events surrounding their

preparation is much appreciated and recognised. Links to these documents and others relevant to

the strategy are provided in appendices I and II and in the References section.

The project has been governed by a steering group consisting of a representative from each of the

three LEPs. Figure 2 below shows how the various workstreams came together. The red diamonds

indicate consultation events with stakeholders. A full list of participants in the main stakeholder

engagement event on 6 March is provided as Appendix IV.

Figure 2 Overview of energy strategy workstreams

An open consultation process was run during April and May 2018, and responses received from

corporate, local authority and individual respondents have all been recognised and incorporated in

this final version. The responses were overwhelmingly positive supportive, and the main requests

were for greater detail, particularly on housing and resourcing. This point has been addressed as far

as possible.

The strategy starts by summarising the specific regional context that is the West Midlands. It then

discusses the economic opportunities in energy seen from this perspective and the challenges and

constraints faced by the region in seeking to maximise economic outcomes from investments in

energy systems. These sections set the scene for the regional energy strategy itself, which is

summarised in Section 5. Section 6 puts this in the context of global best practice, and Section 7

summarises the planned next steps.


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2. The West Midlands

History, geography and political context

The population of the three LEPs which make up the West Midlands Combined Authority is just over

4 million peopleii, and its central location means 90% of country’s population is within 4 hours’

drive.iii There are 1.7 million homes in the area, and over 2 million jobs across 145,000 businesses,

with a business ‘birth’ rate of over 20,000 new businesses a year (around twice the UK average) iv.

Figure 3 The West Midlands Combined Authority geography

The West Midlands is the largest regional economy outside London. The areas covered by the Black

Country, Coventry and Warwickshire, and Greater Birmingham and Solihull LEPs have a combined

GVA of around £90 billion per year. This is larger than those of Greater Manchester, the Leeds City

Region and the South East. The West Midlands LEPs have grown their GVA faster than those regions

from 2010 to 2015 (see Figure 4 below).

This density of population and industry reflects the region’s history and identity, which were largely

forged in the eighteenth and nineteenth centuries on the back of abundant local energy resources

(particularly in the Black Country) and innovation, driven by the then prohibitive cost of skilled

labourv. Strong sub-regional identities and economies persist to this day, with an emphasis on

transport and mobility in the East (where Coventry’s heritage in transport and automotive grew out

of over 250 companies manufacturing bicycles from 1870 onwardsvi) and metal processing in the

West, where there are still over 240 medium-sized businesses within the LEP area focused on

traditional metal forming and component production, largely for the high-technology and

demanding aerospace and automotive supply chains.


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The region has the highest concentration of manufacturers of any regionvii, and accounts for 9% of all

manufacturing employment in Britain.viii It is home to world-class companies including Jaguar Land

Rover (JLR) Aston Martin, UTC Aerospace, and Mondelez as well as much of their supply chains.

The West Midlands is Britain’s largest exporter after the South East and London. ix In 2016, the West

Midlands exported goods worth £3.3 billion to China, more than three quarters of which were road

vehicles. This represented 26% of all UK exports to that country, twice that of the next largest

region. With imports from China of £3.5 billion, the West Midlands is the only region to achieve

anything close to trade balance with what is predicted to become the world’s largest economy by

2030.x The West Midlands has secured more inward investment from China than any other region

bar London - 52 projects in the past 20 years, and 30 in the past six – creating 2,500 jobs and

safeguarding a further 1,500.xi

Figure 4 GVA in 2015 and growth 2010-15 for West Midlands LEPs and those of other regions.xii

Birmingham is Britain’s second city, and its population of just over 1 million makes up around a

quarter of the total West Midlands populationxiii. It is a dense and thriving modern city, with many of

the challenges common to cities worldwide in energy poverty, legacy infrastructure, and a need for

new housing which puts pressure on the surrounding rural hinterland.

There are two further cities within the region which share similar challenges (Coventry (320,000

people) and Wolverhampton (260,000 people)) and seven metropolitan local authorities, as well as

districts of Warwickshire, Staffordshire and Worcestershire which fall within the three LEP

geography and have more rural economies. However, the region has a natural economic geography

and political coherence because its existing transport systems and employment patterns mean a

large part of the population of the WMCA area commute to and from work in the city centres.

Key local stakeholders

The political geography of the West Midlands is evolving rapidly and is currently working reasonably

well (evidenced for example by the GVA growth illustrated in Figure 4). The three LEPs and WMCA

focus largely on specific agendas where working together at regional scale makes sense, for example

around economic development, including transport, inward investment and skills; while the local

authorities run public services and maintain the integrity of their respective geographical places.

All these bodies are properly democratically accountable, and the LEP Boards (which are supervised

by elected representatives) have effectively engaged committed local business interests and

academic institutions, including all the region’s eight universities.


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Major energy-related corporates located in or close to the region include E.ON, National Grid, Calor,

Cadent, JLR, Severn Trent, and UTC Aerospace. These represent a significant part of the GVA

attributable to energy across the region (see Section 3) but a tiny fraction of the 10,000 businesses

active in the energy sector across the regionxiv. Smaller businesses are represented on LEP Boards

and sub-boards through organisations such as the EEF (formerly the Engineering Employers’

Federation) and Chambers of Commerce.

The West Midlands hosts substantial national research and innovation assets in the Energy Systems

Catapult and the universities of Aston, Birmingham and Warwick, which are part of the Energy

Research Accelerator. These universities have highly complementary research expertise in energy

and all have contributed to this strategy in distinctive ways2. Wolverhampton, Coventry and

Birmingham City University further enhance regional energy capabilities, particularly around energy

in buildings, smart systems, local skills development, and industry engagement.

2 Aston’s expertise is in bioenergy and infrastructure economics; Birmingham in thermal energy systems; Warwick in battery and storage technologies and automotive/transport/energy crossover.


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3. Economic opportunity

Energy in the West Midlands Economy

Figure 5 shows the estimated split of annual energy spend in the West Midlandsxv.

Figure 5 The West Midlands energy economy

Although the local energy sector contributes approximately £2.1bn of GVA to the regional economy,

most of this is earned outside the region (it is dominated by companies like E.ON, who sell energy

nationally). The more significant figure is the £6.7bn spent annually on energy by West Midlands

businesses and households. Within this the largest segments are household (domestic) energy bills

and transport costs. Over £960m is spent by the industrial and manufacturing sectors and £0.54bn

by the remainder of the commercial and industrial sector.

The characteristics of each of these demand segments are very different. Much of the West

Midlands’ housing stock is of relatively poor quality and the economic opportunities therefore lie in

large-scale refurbishment programmes and innovation in new build, delivering constant or better

levels of comfort to citizens at lower cost. In transport there are substantial opportunities driven by

global shifts to new fuels such as electricity and hydrogen, while in the industrial and commercial

sectors the economic opportunity is around productivity. Each of these is considered in turn.

Industrial and commercial energy costs

The combined manufacturing and commercial annual spend figure of £1.5bn has a direct impact on

industrial profits and productivity. If the figure were £500m lower, regional productivity and GVA


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would be up to £500m higher (for the same output)3. It is thus very relevant that UK energy costs in

many sectors are up to 41% higher than those of competitor economies (see Figure 6).xvi

Figure 6 Commercial energy costs compared internationallyxvii

It is relevant that around half of electricity costs for typical regional manufacturing companies are

the apportioned costs of regional and national infrastructure investments (Figure 7). This is why

Figure 5 has a shaded box labelled market regulation and infrastructure: there are considerable and

increasing opportunities to influence energy costs, and hence sectoral productivity, simply through

regulation and strategic choices.

Because of their magnitude and impact, the way energy infrastructure costs are apportioned

between sectors is treated as an industrial strategy decision in many economies, although this has

largely been resisted in the UKxviii.. For example, in Germany there is a complex ‘privilege’ system

which allocates network and renewables costs variably between industrial sectors, favouring some

sectors (metal processing) and penalising others (paper mills). Thus, although average industrial

energy costs in Germany appear on face value higher than the UK (Figure 8) in practice they are

significantly lower in many manufacturing sectors (even after UK exemptions for energy intense

industries have been applied) and higher in other sectors (including the domestic sector4) to ensure

that the overall numbers balance (see Figure 8)5.

3 This is true in the short-term and for mature industries with sticky customers competing primarily internationally, like most West Midlands manufacturers. It is not true if GVA measures are based on value-added production function approaches which assume any saving in energy costs will be common to competing firms and hence not impact GVA. Reality is almost certainly somewhere between these two extremes. 4 Headline energy prices in the domestic sector do not necessarily mean higher bills for households provided housing is well-built to high energy efficiency standards. Hence the German public is, up to a point, more tolerant of higher energy tariffs than the UK public, who live in lower quality housing (on average). 5 Note that the UK also applies some (complex) exemptions to energy intense industry, which is why the figures in Figure 8 and Figure 6 don’t align. Figure 6 shows standard UK commercial rates, Figure 8 shows rates specifically for energy intense businesses.


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Figure 7 Split of electricity costs for a medium-sized West Midlands manufacturerxix

In the UK, however, we currently operate a regulated national market system which resists

differentiation between industrial sectors, other than on size (larger businesses pay a lower share of

infrastructure costs per unit of energy). This will tend to differentially handicap our more energy

intense sectors (in comparison to competitor economies with industrial strategies) although several

ad hoc dispensations have been secured over the years to compensate to a degree for this.xx

Figure 8 International comparison of electricity prices

Metered units39%

Supplier costs and margin

2%

Distribution system

21%

Transmission system

8%

Market management

3%

Renewables and Nuclear investments

26%

Levies1%

Breakdown of electricity costs for a medium-sized Black Country manufacturer (November 2017)


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The UK approach to energy market regulation has been extensively criticised in a high-profile report

commissioned by the Secretary of State for Business, Energy and Industrial Strategy (BEIS) and

written by Professor Dieter Helmxxi. In it, Helm makes several relevant observations about the

direction of travel of global energy systems, including the powerful point that within a relatively few

years almost all energy costs will be fixed and apportioned infrastructure costs, with virtually no

variable costs as the cost of fuels essentially falls to zero6.

This has profound implications for UK energy market regulation and how energy costs are managed,

because it means that energy will become very like telecoms or road travel in that usage of the

system once it’s built will essentially be free for everyone up to local capacity limits. In this situation,

pricing cannot meaningfully be based directly on usage: instead it will be entirely focused on

ensuring infrastructure investment costs are recovered, and this may be done in a number of ways

to meet industrial strategy or political objectives.

Transport energy costs

The £3.3bn spent on fuel for transport currently in the West Midlands is virtually all in the cost of

petrol and oil for road vehiclesxxii. However, by 2040, with the sale of new petrol and diesel vehicles

being banned in the UK, the bulk of this demand will shift into electricity or hydrogen.

Figure 9 West Midlands energy use by fuel vector (2015)xxiii

This shift will have major implications for the regional energy system (see Figure 9 West Midlands

energy use by fuel vector (2015)Figure 9). In energy terms, 42,547 GWh of energy currently

delivered to vehicles in the region as petrol and diesel is nearly equal to the amount of energy

delivered through the entire gas network in the region and almost twice that delivered by the

6 This is obvious if you consider that nuclear and renewable energy systems are essentially all asset investments with free or essentially sunk fuel costs. Helm also (slightly more controversially) argues that fossil fuel prices will fall towards zero as it becomes impossible to sell them given increasing global penalties for pollution and carbon emissions.

24172

43935

42547

2575

West Midlands Energy Use by Fuel Vector (GWh 2015)

Electricity

Gas

Fuel for transport

Other


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electricity system. The implications for local energy infrastructure of shifting transport fuel use from

petrol to electricity or gas are thus clearly significant.

This doesn’t mean an immediate need for an electricity system that is three times bigger than the

one today, or a gas system that is twice as big. There is a lot of devil in the detail of spatial and

temporal usage patterns and existing spare capacities, and in uncertainties around the likely mix of

electric and hydrogen vehicles. However, the direction of travel is very clear, and the need for

detailed and closely integrated transport and energy planning at regional level is evident.

Domestic energy costs

Measured by kWh, household energy use overall is of a similar magnitude to commercial and

industrial (C&I) and transport. The costs per unit of energy vary significantly because of

infrastructure cost allocations and political judgements (tax allocations). It is more expensive to

distribute gas and electricity to many small domestic users than to small numbers of concentrated

industrial users (and to distribute transport fuels compared to electricity and gas).

Figure 10 Comparison of West Midlands’ energy use by sector and spend by sector

In the case of domestic energy costs, the annual spend on energy is significantly higher because of

the poor overall quality of domestic building stockxxiv. This is a perennial challenge at national and

local levelxxv but one of increasing urgency as the search for cost-effective and socially acceptable

responses to the challenge of climate change gathers pace. There are 1.7M existing houses in the

West Midlands, with at least 200,000 of these falling within the official definition of homes in energy

povertyxxvi. There are plans to build a further 215,000 homes by 2031xxvii which could easily add

£100-300M to regional energy spending (at current prices).


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In principle, domestic energy bills, usage and carbon emissions can be reduced cost-effectively and

economically (using ‘Green Book’ analysisxxv) by between 10% and 30% i.e., £200-£600M p.a. for the

West Midlands. There are, however, significant challenges around financing, behaviours, transaction

costs, cultural assumptions, customer priorities, regulations and political constraints which inhibit

these benefits being realised. The corollary of this is that the challenges aren’t primarily technical

(i.e., economic technologies exist which could theoretically solve the problem) but more around

innovation in business models, regulations and delivery and financing mechanisms.

The topic of housing energy performance is a major and complex area in its own right, and

significant and detailed work has been done to analyse local housing stock performance by local

authorities across the region. Most recently, the Sustainable Housing Action Partnership (SHAP)

working with the West Midlands Housing Officers Group (WMHOG) has produced a series of reports

on energy performance in both new build and existing housing (2017-18)xxviii.

The key realities driving domestic energy performance from the perspective of a regional energy

strategy are:

• The main determinants of domestic energy bills are the quality of the house and the behaviour

of the occupants. Two houses which appear identical can have energy bills which differ by a

factor of 5-10 because one is well-insulated and well-built (not draughty) while the other is

poorly insulated, draughty because it was shoddily constructed, and occupied by a family

comprising older people or small children.

• Houses and people are highly variable and diverse, and the 1.7M existing homes in the West

Midlands are a particularly good and concentrated example of this diversity.

• In new homes there is a significant and negative gap between actual energy performance of

homes ‘as built’ and the promised energy performance of houses as designed (and approved by

building control). This arises because, in general, energy standards for new build housing are

weak and poorly policed (with limited examples internationally of solutions to this problemxxix).

Established mechanisms to address energy poverty7 and domestic energy efficiency in general

include tightening energy performance standards for new build homes; schemes to provide

subsidised energy efficiency measures for existing homes (the Energy Company Obligation (ECO) in

the UK); local planning guidance requiring adherence to more stringent standards, sometimes even

for renovations above a certain area threshold; local authority and nationally-funded energy

efficiency advice services; and occasional attempts at financial incentives such as lower cost

mortgages or rebates on rates.

Markets alone are ineffective at delivering optimal outcomes in this sectorxxx.

Investment flows

In the West Midlands, we invest around £1.25bn every year in our energy infrastructure: this is

network investments including gas pipes, heat mains, wires and substations; key energy conversion

technologies such as domestic boilers; and local energy generation assets such as solar farms,

district heating and waste to energy plants.xxxi

7 Energy or fuel poverty is defined by government as households who have theoretical fuel bills above average and were they to spend this amount it would leave them with residual income below the official poverty line.


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Around £3.5bn is spent every year in the West Midlands on the built environmentxxxii, which has a

significant impact on energy spend (e.g., see section on domestic energy use above) and on long-

term productivity. This should also be considered as energy infrastructure.

Figure 11 West Midlands annual investment flows - energy

Economic activity

Energy and environmental technologies currently account for £2.1bn of annual GVA in the WMCA

areaxxxiii, and is the most productive of all sectors by value. It is the only sector in which regional

productivity is higher than the UK average. Coventry and Warwickshire and the Black Country are

both in the top five LEPs nationally in terms of % of GVA attributable to energy and environmental

technologies.

Energy Storage and Systems has been identified as one of the four key market strengths in the

recent regional Science and Innovation Auditxxxiv. This reflects the major academic assets in this

sector across our regional universities (see Section 2).

Employment estimates vary between 24,500 jobs and 60,000 jobsxxxv depending on definitions of

geography and sector boundaries. The GVA generated is concentrated in a small number of large

firms (E.ON, National Grid, Cadent, Baxi, Calor) with a long tail of smaller firms. There are significant

employers just outside WMCA regional boundaries (Worcester Bosch, nPower) and significant

economic activity and employment within the region controlled by firms with headquarters

elsewhere in the UK (Western Power Distribution, British Gas).


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These statistics exclude closely-related jobs dependent on energy infrastructure, such as most

manufacturing, transport and automotive jobs, and energy managers within larger organisations.

Engineering and infrastructure companies such as Balfour Beatty, Arup and Costain all have

significant energy infrastructure divisions and presence in the region which may not appear in

sectoral figures, as does Severn Trent which, as well as being primarily a water company, is one of

the largest renewable energy generators in the UK.

Skills are an issue in energy as in many other sectors, with 36% of all vacancies across the energy and

utilities sector nationally attributed to skills shortages.xxxvi The sector skills council for Energy and

Utilities, Energy and Utility Skills, is based in the region (Solihull) as are other key sector interest

groups and trade associations (e.g., Energy and Utilities Alliance, Sustainable Energy Association).

There are several specialist training providers across the region (e.g., Energy Training Hub in Dudley)

suggesting skilled energy sector people are as easy (or easier) to recruit in the West Midlands as

anywhere in the UK.

Carbon emissions and environment

While the West Midlands faces similar challenges in carbon emissions and the environment to the

rest of the country, the urban nature of its geography and position at the heart of the national

motorway infrastructure makes these challenges particularly severe. A reportxxxvii by Sustainability

West Midlands (published in 2010) found the region suffers a carbon deficit compared to the rest of

the UK of around 2MtCO2e per year on top of national targets. This report is now eight years old,

however, and it is likely the situation will have improved somewhat, as take up of renewables since

2010 has been substantial across the West Midlands and nationally, while manufacturing and

transport activity has grown more slowly.

Carbon targets and plans vary significantly by local authority, and while the merits of seeking to set a

regional carbon target were discussed, it was agreed this remains primarily the responsibility of local

authorities. This strategy proposes to follow the national target at regional level and acknowledges

in addition to this it is the region’s responsibility to ensure the energy strategy is sufficiently flexible

to support local authorities in delivering their local objectives.

Transport is a major element in the regional economy and recognised globally as one of the hardest

sectors in which to reduce CO2 emissions. However, vehicles are largely responsible for the toxic air

pollution that afflicts cities worldwide. Nitrogen oxides and particulate matter emitted by diesel

vehicles are key ingredients in outdoor air pollution that causes 3.7 million premature deaths each

yearxxxviii. In the UK, the government estimates that each year these emissions cause between 44,750

and 52,500 premature deaths and cost society between £25.3 billion and £29.7 billion.xxxix The West

Midlands share of these figures will be between 5-10%, equivalent to 2,500 to 5,000 people dying

prematurely in the Combined Authority area each year, at a cost to society of £1-£3billion.

The government has largely devolved the challenge to local authorities under the Localism Act 2011

and revisions to the Environment Act 2008. It has instructed five city authorities including

Birmingham to implement Clean Air Zones by 2020. These will prevent the most polluting vehicles

such as older diesel buses, coaches, taxis and lorries from entering the most polluted areas at times

of day, or charge them for doing so. In Birmingham, the scheme will also cover vans.xl


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Specific regional opportunities and needs

The West Midlands sees energy as core to the region’s local industrial strategy (Figure 12). The scale

of investment and potential benefit is substantial, so although this is a local strategy, it’s important

to bear in mind that tackling the issues and opportunities will require a commensurately ambitious

and innovative response.

Figure 12 West Midlands Industrial Strategy Framework

A recent report produced for the WMCA by the Black Country LEPxli estimates that a focused regional

energy strategy could deliver annual GVA improvements of between £400M and £820M. This is

broken down as indicated in Table 1 below.

Note that in this table the benefits of enhanced building energy efficiency (including housing) are

estimated (conservatively) within the ‘attractiveness of the region to skilled people’ line. The range

of benefits shown is very large due to the challenging nature of this problem.

Accelerated roll out of new developments refers to the electricity and gas infrastructure required to

support new investment in manufacturing and commercial developments across the region. This will

amount to £3-4 billion over the next decade (see Investment Flows above): the figure of £100M is

the estimated GVA benefit from accelerating the timing of this investment to align it more closely

with local spatial and economic development plans.

Speed of new market development is about making West Midlands energy infrastructure fit for

purpose to support mass roll out of low carbon transport systems, including EVs. Again, the scale of

investment runs into billions (much of it around HS2 terminals) and the strategic need is to ensure


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this is timed to make West Midlands markets more attractive for inward investment and new

technology deployment.

Potential Benefits of a Focused Regional Approach to Energy as an Enabler of Industrial Strategy

Provisional GVA impact estimate (p.a.)

Accelerated roll-out of commercial developments £100M

Speed of new market development £120M

Competitiveness of industry £155M-£400M8

Attractiveness of the region to skilled people £25M-200M

Total £400M - £820M

Table 1 Summary of potential GVA benefits delivered by a West Midlands Regional Energy Strategy

Competitiveness of industry refers to the benefits of energy efficiency, smart energy systems,

efficient procurement and strategic infrastructure cost allocation for energy intense manufacturing

businesses, to ensure they compete on a level playing field against international competitors.

These figures exclude the benefits of clean air (estimated at between £1bn and £3 billion, see above)

and are conservative on the potential benefits of clean energy innovation (the figure for the region

offering opportunities for accelerated market development is based purely on additional local sales

of low carbon vehicles by local companies).

In addition, the separate report by Arupxlii (see Appendix II – Pilot Energy Innovation Zones and

Investment Cases) identifies up to £490M of economically viable energy infrastructure investment to

optimise economic and environmental benefits in four pilot energy innovation zones.

Headline investment projects

The West Midlands is an ambitious region with major investment and regeneration projects

underway across the geography: over £2 billion of investment is planned for UK Central and Solihull

with the arrival of HS2; similar levels of investment are planned for Birmingham (again with HS2 and

the redevelopment of Smithfield) and Coventry (housing and new manufacturing facilities for JLR)

with £1.5 billion being invested in the Black Country’s Enterprise Zones.

It will be critical to get the local energy infrastructure right for these projects, and that’s challenging

and risky at a time of major change in global energy systems. There is a danger that the tendency of

commercial investors and developers to focus exclusively on short-term profit maximisation results

in energy infrastructure investment which quickly turns into stranded assets and limits the long-term

economic and environmental sustainability of the surrounding local community. There is a strong

regional interest in getting investment in infrastructure right.

It’s not just the headline schemes that need appropriate energy systems. As Appendix I summarises,

there are clean energy opportunities across the region, including at least a dozen district energy

8 The higher figure assumes Helm’s national recommendation to establish a legacy bank for historic energy infrastructure investment costs is adopted in the West Midlands.


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schemes, four major waste-to-energy projects with contract renewals due in the next five years, and

approaching £200M of solar PV investment opportunities in the Black Country alone.

Housing challenges

The West Midlands has significant housing issues and opportunities. The current expectation is that

215,000 new homes will be created in the region (net) over the next 12 yearsxliii . This represents

mixed public and private investment of around £20bn, and an additional electricity requirement

which could vary from virtually zero to 8TWh per year xliv, xlv. In electrical capacity alone, these

houses will need around 80MW of new base power generation and 200MW of available peak power

generation (assuming no innovation in control technologies and load shifting)xlvi. This assumes heat

continues to be provided by gas and allows for no electric vehicles.

Energy poverty is a significant issue for the region, with rates exceeding 13.5% in several areas of

Birmingham, the Black Country and Coventryxlvii. This is a consequence of poor quality (often private)

housing and domestic energy prices. A concerted strategy to address this needs to focus on the built

environment and infrastructure as well as headline domestic energy costs.

The number of households in fuel poverty across the region is around 200,000xlviii which is potentially

a substantive and targeted market for energy efficiency refurbishment (retrofit) using innovative

models such as Energiesprong9. This is only likely to be appropriate to particular configurations and

specifications of housing – particularly the large estates of the 1950s and 60s – and many other

models are also being developed, for example by the Energy Systems Catapult in Birmingham.

Energiesprong retrofits eliminate fuel poverty from households where they are applied and recover

the costs over 30 years via (lower) energy bills. This scale of radical low carbon retrofit on 200,000

houses would require investment of around £4 billion, all with positive financial and social returns.

One of the main lessons from initiatives like Energiesprong and the Catapult’s Smart Systems and

Heat Programme have been that solving the housing energy efficiency problem will require a

diversity of approaches, considerable attention to detail (which means new skills programmes,

training, and cultural changes for construction workers and professionals) and new business models.

For example, Energiesprong works well under Dutch regulations but requires significant

modifications in business model to work in the UK, and even then models only exist so far for the

social housing sector. Economies of scale will be important in keeping costs down, but reconciling

the need for scale with delivering higher quality and more diverse and tailored outcomes is a

challenge in any sector, let alone one as fragmented and traditional as housing and construction.

The major UK government scheme supporting energy efficiency in housing is the Energy Company

Obligation (ECO). This has been in place for some time and is about to start a new four-year cycle,

despite its many imperfections, which the government recognisesxlix. The West Midlands’ share of

ECO is around £60M per year, and there is a strong alignment between government objectives and

West Midlands’ needs. Specifically, the scheme is now 100% focused on fuel poverty, recognises the

need for greater local authority involvement to support efficient targeting, and seeks greater

innovation.

9 Energiesprong is currently being piloted by a consortium in the UK including Accord Housing, who are based in the Black Country, and have a manufacturing facility (LoCal Homes) in Walsall.


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Energy Capital therefore sees a significant opportunity in ECO for the West Midlands to work with

government to develop a better model for fuel poverty elimination, and one that also supports the

local industrial strategy. This will be a key element of this strategy.

Electric vehicles

Electric vehicles are a strategic and critical area of opportunity to this region because of the region’s

heritage and strategic strengths in advanced manufacturing, low carbon technologies, transport and

logistics and construction. EVs represent a significant market opportunity for all these sectors. They

are also a challenge we cannot ignore: the West Midlands must secure a leadership position in this

area to retain a significant element of our economic strength.

The region’s potential strength in this sector has already been recognised by the government in

locating the £80M National Battery Manufacturing Development Centre in Coventry, and Jaguar

Land Rover bringing its first electric vehicle to market in 2018. To maximise the economic and

environmental benefits of this investment, the region – especially around Coventry and Solihull –

plan to invest significantly in connected autonomous vehicle (CAV) development and infrastructure.

Various stakeholders are already discussing the creation of EV charging hubs and infrastructure

(including vehicle to grid) at commercial scale.

Electricity networks and distributed generation

Western Power Distribution commissioned Regen in 2017 to carry out a comprehensive review of

renewables and distributed energy technology opportunities in the region. This provides further

useful indications of the likely investment opportunities (and uncertainties) across the region up to

2030l.

Figure 13 Historic growth of distributed generation in the West Midlands


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Figure 13 shows cumulative investment of around £1 billion in regional distributed energy

technologies over the past seven years, delivering more than sufficient power, for example, to

support the housing growth planned for the next decade.

Figure 14 shows a range of projected futures for regional distributed generation investment

modelled on National Grid’s Future Energy Scenariosli. This includes varying assumptions for electric

vehicle (EV) take-up, and broadly equates to between £400M and £2.5 billion of investment

opportunities in local generation alone (before heat and network investments) up to 2030.

Figure 14 Projected future distributed generation investment in the West Midlands to 2030

Hydrogen

The West Midlands has longstanding interests in the developing hydrogen economy including

companies such as Microcab that are developing fuel cell powered vehicles. There are plans for

hydrogen refuelling facilities in Tyseley Energy Park alongside the existing 10MW biomass power

station, and joint research and development facilities in emerging biomass and hydrogen

technologies run by the University of Birmingham and Frauenhofer ISI.

The University of Birmingham has the UK’s only integrated and internationally-recognised research

programme across all aspects of fuel cells and their fuels lii. In 2017 a hydrogen-focused network was

launched (the Midlands Hydrogen and Fuel Cell Network) specifically to support commercialisation

activity around hydrogen in the region. Birmingham City Council is committed to trialling hydrogen

powered busesliii and waste vehicles as part of their fleet.

Waste-to-energy and heat networks

There is a concentration of waste-to-energy facilities in the Black Country, as well as major plants in

Coventry (44MWe) and Tyseley (25MWe). Currently, only the Coventry plant is committed to linking

into a district heating scheme but plans and feasibility studies have been completed for the plants in


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Tyseley, Dudley, Wolverhampton and Sandwell. These create the opportunity to develop commercial

integrated schemes (subject to negotiation and contracts) when waste contracts come up for

renewal between 2019 and 2023.

There are several private waste-to-energy plants in the Black Country, and some are now exploring

local private wire arrangements with nearby manufacturers. More detail on potential waste-to-

energy and heat network schemes is provided in Appendix I.

Birmingham has an established district energy company, BDEC, serving much of the city centre

including council buildings, the International Convention Centre, Children’s Hospital and Aston

University. This is in partnership with ENGIE (as is the Coventry scheme). Both Warwick and

Birmingham Universities have their own on-site gas-fired CHP10 networks as the main source of heat

and power for their campuses.

Global markets

The global energy system is on the cusp of a major transition. For most of the past century technology and economics have supported a largely one-size-fits all approach to energy infrastructure. Attempts to do anything more than superficially adapt energy systems infrastructure to local needs would either have imposed excessive costs or resulted in inequities in access.

However, rapid reductions in the costs of communications, ICT, and energy storage and generation technologies are changing this context fundamentally.liv Figure 15 illustrates one example: a projected 60% reduction in the installed cost of battery storage to 2030lv,11.

Figure 15 How costs of energy technologies can fall rapidly

10 Combined Heat and Power 11 Note this is installed cost; the actual technology costs are falling much faster (for example Lithium ion battery costs fell by 60% from 2014-17 (same source).


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Digitisation and energy storage technologies make it possible to optimise energy systems at much more local levels, and to manage them in a distributed way lvi. This in turn means national energy infrastructure, including energy market and regulatory structures, can accommodate more diversity and variety (at least in principle). The benefits of such local diversity in energy systems and responsiveness to local needs now outweigh the costs.

These fundamental technical changes have been accompanied by significant global political shifts, in particular, recognition of the need to address the challenges of climate change through reducing carbon emissions. The energy system is the largest emitter of carbon globally and thus at the forefront of these political changes.

The economic opportunities associated with these shifts are potentially huge. The broad global political consensus around climate change is manifest in changing customer attitudes, varying national targets, regulatory nudges, and incentives across the world, all of which create significant markets for clean energy technologies and systems.

The most recent estimates (e.g., from the World Bank, Oxford Economics, McKinsey, and IEA) of the global market opportunity for clean tech products and services suggest a market of well over $3 trn a year, with energy infrastructure investment alone accounting for between $2.5trn and $3trn a year between now and 2040lvii. The challenge in taking advantage of this global market opportunity is that it will clearly require new cross-sectoral collaborations, for example between transport, energy, construction and digital sectors, and the transfer of know-how from sectors such as advanced manufacturing and logistics to construction and energy. Unlike the West Midlands, few regions have economies with strengths in all these areas, especially when coupled with a diversity of both research and practice-led universities to support effective cross-fertilisation and the emergence of new competencies. Effective commercialisation of cross-sectoral innovations requires accessible markets of sufficient scale to support rapid scale-up (for example helping new businesses cross the ‘valley of death’) lviii. The West Midlands is big enough – comparable in population and economy to a small country such as Finland, Denmark or Norway – to offer such a market, particularly in the energy sector where public policy unavoidably plays a major role in determining outcomes (in any political system). For these reasons, low carbon technologies and services are justifiably identified as a key strategic sector in the West Midlands’ industrial strategy, and the region has a unique opportunity to benefit from the $3trn global market opportunity currently developing.


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4. Challenges and constraints

There are, however, significant challenges in any attempt to address energy strategically at regional

level in the UK, despite the clear potential economic and environmental benefits of doing so as

summarised in Section 3. This section reviews these challenges under seven broad headings, setting

the agenda for the focused strategy set out in Section 5.

The speed and nature of technological change and choice in energy systems

There are a wide variety of technical choices to make in any energy system, whether for an

individual house, a region or a country. The economics of energy technologies in a given place are

also not independent of each other12. For example, a district heat energy system may make

economic sense if local housing is poorly insulated or no sense at all if the same housing is

retrofitted with the latest insulation (an economic choice which makes complete sense for the

householder but not for the district heat operator).

This context is further complicated when technological change and changes in the economics of

individual technologies are occurring on the scale and at the rate illustrated in Figure 15. The current

world is one in which proponents of hydrogen, electric vehicles, biomass, solar, nuclear, micro-CHP,

district heating, smart controls, energy storage, building energy efficiency and heat pumps can all

credibly claim to be offering game-changing rates of technical progress and cost reduction.

These two realities can create a significant risk of very poorly informed and meaningless public

debate and policy-making. This is particularly true at national and international level, and in political

systems where public servants are poorly equippedlix to resist specialist lobbying by corporates and

academic proponents of specific technologies. The outcome is too often much time wasted debating

questions which are meaningless and impossible to answer in the abstract: like ‘are heat pumps

better than gas? or wind better than nuclear?’. Such questions can only be answered in a defined

context (i.e., for a specific geography and set of infrastructure and market regulations) and at a given

moment in time.

Energy investment decisions will always entail significant uncertainty and risk, because a high rate of

innovation means the only certainty is that tomorrow’s economics will not be the same as today’s.

Some assets will thus be ‘stranded’ and looking back at decisions with the benefit of hindsight will

find that if a different choice had been made a lower cost outcome would have resulted. The

challenge then, is not to identify the best technologies to deploy in any kind of general sense, but to

ensure that energy investment choices and decisions are made by those best placed to manage the

unavoidable uncertainty and risks that all such decisions entail.

Two further points are increasingly relevant to many energy choices:

1. Energy infrastructure choices are becoming more granular and local. This point has already

been made in Section 3 and is the outcome of the reducing costs of storage and digital

12 This should probably be written more forcefully: the economics of energy technologies are typically highly dependent on other energy technologies already present and the infrastructure around them. To give a stark example, a gas boiler has no economic value at all to a property off the gas grid.


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control technologies. Put another way, the proposition is that varying local energy

infrastructure no longer necessarily means extra cost and risk to the national system.

The challenge this creates is that it’s no longer economically optimal (or sensible) to think

about a single national energy infrastructure. It’s becoming in everyone’s interest –

especially the customers who pay for energy – to think about infrastructure choices more

locally. This makes regional and local energy decision-making more challenging (because it’s

no longer simply about what investments should be made in generation and demand-side

assets given a fixed infrastructure – the infrastructure itself is now fluid and part of the

process) but is more likely to result in better outcomes and match risk to reward.

2. Energy investments (and their economics) are increasingly tied into wider (non-energy)

infrastructure and policy decisions. Carbon pricing, carbon targets and environmental policy

are the obvious examples of this at global, national and local level, but local waste,

transport, and industrial strategies will also be critical factors determining the viability and

attractiveness of energy projects, as will housing and spatial plans.

This means that to manage the risks and uncertainty of energy investments effectively, decision-

makers need to be able to take a broad range of interests and issues into account. This becomes very

difficult (and can easily lose touch with political realities and voters) where decisions are taken at

regional or national level – and which is why much spatial, waste and transport planning is done at

local authority level.

Customer engagement in energy markets

While customers can occasionally get very engaged by energy technologies and energy investment

and infrastructure choices in particular (for example, wind turbines, waste-to-energy plants or

nuclear power) they are largely apathetic and disengaged when it comes to the energy market.

Around 95% of customers of the larger suppliers are paying more than necessary for electricity and

gas, despite the best efforts of Ofgem and others to persuade customers actively to shop around and

switch suppliers regularlylx.

This is a significant problem for any effort to ‘do energy differently’, especially where such efforts

assume benefits will be delivered by active competition. Markets simply don’t work if people ignore

them and refuse to visit.

So, it’s essential that any strategy include some model for customer engagement and

communication, particularly if benefits depend on customers making active and informed choices.

Narrow definitions of innovation

As discussed in Section 3, there are major opportunities for innovation and the emergence of new

business models in energy (including potentially whole new industrial sectors, such as autonomous

vehicles and connected homes). Facilitating the development of such models and such innovation is

critical for the region to maximise both economic and environmental benefits. However, care needs

to be taken not to constrain growth by taking too narrow an approach to innovation regionally.


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A tendency to define innovation solely as commercialising new technologies emerging from

university-led research, coupled with an innovation agenda largely set by existing (and typically

larger) industrial interests, may result in too narrow an approach to innovation.

Both these aspects of innovation are, of course, fundamentally important and need to be supported.

But in regional energy systems and to deliver the scale of ambition of the West Midlands, it’s also

critically important to recognise the value of investment which is innovative in the sense of, for

example:

• new applications of existing technologies at a scale beyond anything previously attempted;

• new combinations of existing technologies in a systemic way, creating new business models

and new customer outcomes;

• incremental development (including simple cost reductions) of existing technologies

• innovative market regulation and governance, creating incentives for investors and

innovators to take significant commercial risks at scale;

• investment in energy infrastructure which may not be that innovative, but which unlocks

whole new markets for low carbon energy technologies and systems and opportunities for

economic development.

Innovations such as Tesla are (arguablylxi) far more likely to arise from this kind of innovation than

innovation driven by leading edge research or existing automotive or energy interests.

Innovation focused entirely on business models and on facilitating activity is also critical, particularly

in sectors such as domestic retrofit, for the reasons set out in Section 3. For example, installing

insulation is not inherently innovative. However, guaranteeing the performance of this insulation is

innovative, as is financing insulation through a new mechanism, whether this be local crowd funding

of retrofit projects through bonds or debentures, or social impact bonds, equity release, or green

mortgages. Building a library of common retrofit construction details and solutions to technical risks

would also be innovative, as it would help upskill architects, and overcome some of the barriers to

retrofit being rolled out to a high standard13. These types of innovation particularly need to be

publicly driven and supported, because they are least likely to be driven by market forces and the

private sector.

The innovation challenge in the energy sector (particularly energy infrastructure) is especially acute

stemming from the combination of:

• the world currently emerging from a relatively long period (several working generations)

when the whole energy sector has been relatively static and slow-moving, with very limited

innovation;

• a one-size-fits-all approach to national energy infrastructure that was driven by the

economics and technologies of the 20th century rather than the 21st;

• a long-standing cultural problem with UK innovation policy which places too much emphasis

on the simplistic ‘linear’ model of innovationlxii.

Some progress has been made in recent years with the creation of the Catapults nationally, and in

particular the Energy Systems Catapult in Birminghamlxiii, although there is still some way to go in

13 We are indebted to the consultation response of George Simms for this paragraph.


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recognising the need for (and value of) local variety and sensitivity in energy systems. The regional

energy strategy is an opportunity to take a broader perspective on innovation.

Diversity of local ambitions

The West Midlands’ scale gives it economic weight and the ability to deliver substantial and

ambitious schemes and policy objectives, to national as well as local benefit. It is, however, a diverse

geography (see Section 2) and the workshop-style medium-size manufacturing of the Black Country

has very different needs from, and offers different opportunities and challenges to, the

concentration of automotive manufacturing in Coventry and Warwickshire (for example).

Similarly, the highly diverse and concentrated urban population and environment of Birmingham

contrasts with the rural environment and town centres of Warwickshire, North Worcestershire and

South Staffordshire. It isn’t at all clear that the same energy system will benefit all areas equally.

The challenge is to see this diversity as a strength and a virtue, in common with the people who live

in the region (who often commute from rural towns to Birmingham, or vice-versa for leisure and

shopping) and not to develop an energy strategy which either ignores or undermines the diversity of

ambitions and loyalties this variety creates.

Complexity of political institutions and public sector capacity

The diverse economic geography of the region is reflected in a complex layering of political

institutions which can appear somewhat impenetrable to outsiders, although in practice it generally

works very well and makes sense to those involved.

The table below summarises the political structure of the region.

Body How many

Broad role(s) Accountability

West Midlands Combined Authority

1 Transport; industrial strategy; housing and land; productivity and skills; strategic infrastructure

Democratic and to constituent members

Local Enterprise Partnerships 3 Economic development (Innovation; creativity; growth)

Local authorities via supervisory board

Constituent Local Authorities 7 Deliver public services – all metropolitan and unitary authorities

Democratic

Non-constituent Local Authorities

11 Deliver public services – fewer voting rights on WMCA; mix of unitary, shire and district councils

Democratic

Table 2 West Midlands’ political structurelxiv

As at the end of 2017, only five of the seven constituent local authorities retained specialist energy

or sustainability officers. The LEPs and Combined Authority had no dedicated energy officers at all,


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although the boards of all three LEPs include individuals with energy expertise (reflecting the

strength of the sector across the region). Several local authorities retain energy project managers

and specialists on a consultancy basis when required (e.g., Birmingham City Council has been

working with a specialist team for over a year on the setting up a retail energy company).

This limited resource is potentially a significant challenge, particularly to efficient and informed

ongoing discussion of local needs14. However, it has facilitated a recognition at all levels that energy

investment is an area which may well best and most efficiently be supported from the Combined

Authority and driven the formation of the Energy Capital partnership for the region. Energy Capital

has been well supported by the public and private sector.

BEIS have recognised public sector capacity issues in energy nationally and are funding the

equivalent of one specialist energy post per LEP area for the next two years. This funding will be very

helpful in supporting better dialogue and knowledge transfer, but will fall some way short of the

resource necessary to deliver any meaningful strategy for the region with the scale and impact

justified by the opportunities outlined in Section 3. The lack of alignment between regional hubs and

political boundaries (i.e., governance) is unhelpful and clearly inefficient.

Existing industrial strengths

The West Midlands has historic strengths in several sectors, especially automotive and

manufacturing. This is a weakness and risk, of course, as well as a major virtue.

Given the global consensus that new cross-sectoral business models are likely to emerge as the

energy transition unfolds (and companies like Tesla and Amazon already exemplify this), it will be

very important to the long-term economic success of the region that not only existing industrial

strengths are reinforced through our energy strategy.

The regional approach must support new firms and start-ups with potential to grow, and the ‘silent

majority’ of mid-sized manufacturing firmslxv who could grow substantially by redirecting their

existing skills and competencies to new markets and opportunities opening worldwide.

A mismatch between regulatory system design and market opportunities

There are two separate and equally fundamental issues with energy market regulation from the

perspective of a region seeking to develop a coherent and meaningful energy strategy to deliver

local economic, social and environmental objectives. One is the complexity of the system, the other

is a structural mismatch between regulation and where technical and economic opportunities lie.

Historic complexity

Over the last 40 years the UK has led the world in developing a market-based regulatory model for

energy. This model was initially successful, but the past 15 years have seen a progressive return to

government control and increasing criticism of the complexity and outcomes delivered for

customers, which generally result in higher priceslxvi.

The desire of government to be involved in energy market regulation is understandable (and

probably necessary) because energy has such a significant potential impact on economic and

14 This did not prevent all seven constituent local authorities responding promptly and helpfully to this project.


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environmental outcomes at all levels – national, regional and individual. However, the consequence

of recent UK history in this sector and the rather confused mix of ‘independent’ regulation of

privatised companies and increasingly robust government intervention (e.g., the introduction of

price capslxvii) has created a complex and opaque energy sector. This slowly stirring soup of

regulations is virtually impenetrable to many insiderslxviii, let alone to local or regional authorities (or

small and medium-sized businesses) wishing to innovate or develop coherent and ambitious

strategies in this sector.

Structural mismatches

The current structure of UK energy markets is summarised in Figure 16 below. Since 2010, criticism

has come from all sides of academic and political debate (for comprehensive and largely opposing

academic critiques see Helmlxix, iGov (Mitchell)lxx).

Figure 16 How the UK energy market is structured

The practical reality is that this makes it challenging to take an integrated, market-based approach to

energy systems and energy infrastructure planning at regional level. This is because energy markets

and energy infrastructure are primarily regulated, planned, and managed nationally, whereas

transport, waste and spatial plans are primarily planned and regulated regionally and locally.

Successful modern distributed energy projects and economic opportunities associated with (for

example) low carbon autonomous vehicles, smart connected homes, and optimised waste-to-energy

systems, require integration of transport, waste, spatial, digital and energy strategies. They require

local political and community consent and engagement. If energy systems investment is

fundamentally regulated nationally while other key enablers of energy projects are controlled

locally, progress will be limited.


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This is not purely a regulatory and policy point. Regulation essentially specifies how returns on

investment are allocated. If regions want or need to invest in substantial energy infrastructure to

support their economic goals and local needs, they need to be able to offer investors returns on

these investments. Constraining such returns within national regulatory frameworks inhibits and

prevents this.

The essential argument in this strategy is that maximum economic, social and industrial benefit can

be secured by optimising the energy system starting from inherently diverse and place-based

requirements and opportunities. Increasingly this means paying attention to distribution and

generation infrastructure at a regional level (integrated with other regional infrastructure and

industrial needs) in the context of an overarching national system which supports this.

The system is currently designed on the assumption that distribution and transmission infrastructure

is essentially fixed, changes only slowly, and has little or no impact on competitiveness. It assumes

that the only economically viable generation assets are national in scale. These assumptions were

broadly true in 1970, 1980, and 1990 but from 2000 they became diminishingly true and no longer

hold.

The present UK system therefore assumes that the only economic benefit and industrial advantage

that the energy system can offer is through competition in retailing energy and in generating energy

to supply a national system. In the 21st century, these assumptions are simply wrong15.

15 In saying this, this strategy agrees with Dieter Helm, who develops all these points at some length in his cost of energy review.


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5. Our regional energy strategy

Overview and principles

The West Midlands Combined Authority is a new organisation with a new Mayor, working to an

ambitious agenda with three highly effective Local Enterprise Partnerships and supportive

constituent local authorities. This creates an opportunity to develop a distinctive and powerful

regional energy strategy building on the region’s unique history and meeting its unique regional

needs (See section 3) while addressing the challenges set out in Section 4.

Reflecting this background and context, the strategy is built on five core principles:

1. Respect for diversity and existing strengths across the region.

2. Leadership in the clean energy transition nationally and internationally through innovation.

3. Partnership across sectors and between our universities, businesses and communities.

4. Openness to new thinking and transparency to support this.

5. Focus on areas where we can make the biggest difference by working together at regional

level.

Local leadership of regional energy activity is seen as fundamental to success16. This means local

authorities and the communities they represent. This strategy is thus a framework for local energy

leadership at scale and creating impact across the West Midlands.

These core principles are translated into four specific initiatives:

1. Development and use of Energy Innovation Zones (EIZs) to provide a simple, flexible

mechanism to support integrated local energy infrastructure transition, investment and

accelerated deployment of innovation. The West Midlands has led on the development of

the concept of EIZs nationallylxxi.

2. Creation of an innovative and democratically accountable regional energy governance

structure, Energy Capital, in partnership with national stakeholders and energy system

operators. This will manage risks, help secure necessary funding and regulatory powers and

provide assurance to national system operators and regulators that local activities remain

within national market and regulatory frameworks.

3. Investing in specialist resource to help secure long-term funding at scale for targeted and

appropriate local energy investments, innovation and development of an active innovative

energy business cluster at scale. We propose to target raising £500M of investment funding

to support commercially viable energy investment across the regionlxxii.

4. Targeted support for innovators, ambitious existing businesses and citizens in taking

advantage of the economic opportunities created by the global energy transition. This will

build on existing initiatives and institutions.

16 This is a technical point as well as a political and logical one. The more localised an energy project, the more sensitive its economics tend to be to customer engagement: local people impact project development risk and costs significantly (for example for wind and waste-to-energy schemes) and customer behaviour is typically the key determinant of financial returns on demand side energy projects. For example, wayleaves for district energy pipework and other such details are all under local authority and community control and critical to efficient and profitable project delivery.


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Objectives and vision

We aim to:

• reduce energy costs for our strategic industries to enhance their competitiveness and

productivity;

• reduce the incidence of (and potential for) fuel poverty among households, particularly in

Birmingham, Coventry and the Black Country;

• deliver the region’s share of national and global carbon budgets;

• create a regional energy infrastructure which puts the West Midlands at the leading edge of

the global energy and transport systems transition and make this region the most attractive

market to commercialise new energy and transport system technologies in the UK.

For each of these objectives we will set ourselves measurable targets as set out in Table 3 below.

Objective Proposed target

Energy costs for our strategic industries Equivalent or better than costs paid by German competitors by 2023

This means delivering a typical 20-25% reduction, depending on sector

Reduced incidence of fuel poverty across our 1.7M households (currently approximately 200,000 homes are in fuel poverty across the region)

Beat national government targets17,lxxiii by at least 5 years

As many fuel poor households as practical in Band C homes by 2025

As many fuel poor households as practical in Band D homes or better by 2020

Reduce the likelihood of households falling into fuel poverty by improving the average energy performance across all households and tenures in the region on an annual basis

Deliver our share of national and global carbon budgets

Reduce regional carbon emissions by 26% between 2016 and 2030lxxiv

Create a regional energy infrastructure putting the region at the leading edge of the global energy and transport systems transition

£1bn GVA improvement by 2025 through Energy Innovation Zones and associated cluster support and technology commercialisationlxxv

Table 3 Strategic objectives and targets

17 In 2014, the Government put in place a new statutory fuel poverty target for England: to ensure that as many fuel poor households as reasonably practicable achieve a minimum Fuel Poverty Energy Efficiency Rating (FPEER) rating of Band C by 2030, with interim targets of Band E by 2020, and Band D by 2025. Bands are ways of measuring the energy efficiency of housing: A is good and E is poor.


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Anticipated projects and pipeline - who picks the winners (and losers)?

There are over £490M of commercially sensible innovative energy infrastructure projects in the

proposed pilot EIZs alonelxxvi and at least the same scale of opportunity again across the wider region

(Appendix I – Sub-regional mapping reports). In total, the analysis in Section 3 indicates that more

than £15 billion of investment will be needed as a baseline scenario in energy infrastructure across

the three LEPs between now and 2030, plus a further £74bn in energy-dependent technologies such

as cars (£32 billionlxxvii) and buildings (£42 billion) over the next 12 years.

The task of this strategy is clearly to influence these investment flows to ensure regional strategic

targets are met, but given the challenges set out in Section 4, who is best placed to make the key

investment choices is a moot point.

A fundamental challenge in the energy sector is that who picks the winning and losing technologies

is not a simple question to answer. Individual customers select energy suppliers and choose between

makes of car (creating what looks like competitive markets). However, the costs of delivering the

energy to the customer’s home or of driving the car are largely determined by local infrastructure,

and the investment decisions which shaped this have been taken over decades by national and local

stakeholders, including government and private companies18.

Similarly, experts and innovators may be convinced a new energy technology, such as a type of fuel

cell, is bound to succeed in the future. But if customers don’t want it and the local infrastructure

asset base doesn’t support it economically, it probably isn’t going to succeed.

So, the answer to ‘who picks the winners’ in energy is that it’s not the market, nor the government,

or experts or innovators, but a complex combination of all of these. An effective regional strategy

(and indeed market design and national system) needs to recognise and work with this reality.

Currently, infrastructure technology winners and losers are chosen by network operators with

regional monopolies regulated nationally, broadly on the assumption that not a lot is fundamentally

going to change: a one-size fits all system is the only economic option. Thus, who picks winners and

losers doesn’t really matter. As previously discussed, almost everyone in the energy sector

recognises these assumptions are now outdated, and the most economically competitive future

systems will be more sensitive to local opportunities and needs (i.e., driven by local markets).

A more locally sensitive process for making energy infrastructure choices and investment decisions is

therefore required.

This strategy responds to this challenge in three ways.

1. It creates a framework through Energy Innovation Zones for localities to act as intelligent

and strategic customers (i.e., procurement and investment bodies) for future energy

infrastructure and asset investments. EIZ Partnership Boards will comprise stakeholders

relevant to the local area (often including academic experts and distribution network

operators) and controlled by the local authority which represents the long-term

democratically determined interests of the area.

18 This is arguably one reason why customers fail to engage in retail energy markets: they know the real cost-determining decisions are not in their hands.


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2. It provides support for the creation and operation of EIZs through Energy Capital, which

itself provides a gateway to wider support (such as BEIS’ Energy Hubs). Energy Capital will

help fill gaps in expertise where necessary; it will develop large-scale investment funds; and

provide access to regulatory and specialist legal advice and support where this is necessary

and helpful (this will be provided to local authorities as well as EIZs where required). Energy

Capital will ensure regional investment and activity in the energy sector continues to

conform to national market regulations and policy.

3. It sets out measurable, focused, and ambitious targets to prioritise activity and ensure

national and regional economic needs are reflected in EIZ and local authority objectives.

What the strategy does not do is tell localities which technologies or projects to invest in or which

infrastructure choices will be best for them.

Energy Innovation Zones

Energy Innovation Zones (Figure 17) provide a flexible framework for focused energy infrastructure

investment meeting local community needs. They are mechanisms for risk-managed transition to an

appropriate energy infrastructure for the future. EIZs are defined areas operating with specified

flexes in energy and planning regulations to encourage competitive innovation in energy

infrastructure systems and meet local needs. The defined geography and local governance of an EIZ

enables new energy infrastructure to be delivered integrated with transport, digital, and economic

development plans and in innovative ways responsive to local needs that is simply not possible

through existing national energy governance structures.

Figure 17 Energy Innovation Zones schematic (courtesy Dr Gavin DJ Harper)

Each EIZ is established and approved through the regional energy governance structure (see Figure

20) and has dedicated resourcing reporting to a local EIZ partnership board.


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Discussions to develop an appropriate framework for EIZs have been taken forward through a

Regional Energy Policy Commissionlxxviii, chaired by Sir David King and jointly funded by the

Universities of Birmingham, Warwick and the Energy Systems Catapult. The Policy Commission is

sponsored by the WMCA and Mayor and supported by BEIS, Ofgem, and national and local energy

system stakeholders.

Appendix II – Pilot Energy Innovation Zones and Investment Cases provides overviews of each of the

four pilot zones, while Appendix I – Sub-regional mapping reports summarises specific project

opportunities (or references to existing sub-regional project pipelines) within these zones and

beyond. The Arup report Business Cases for Energy Innovation Zones in the West Midlandslxxix sets

out a range of infrastructure and project investment options for each EIZ from a baseline case

(£270M investment across the four zones) to a more innovative case (£490M investment across the

four zones). This investment will generate circa £200M GVA improvements by 2030 towards the

overall £1 billion strategic target set out earlier in this strategy.

Wider initiatives, including cluster development and business support

The four pilot EIZs are only the start. The remaining £800M of targeted GVA benefit will be delivered

through a range of locally led interventions, including identification and development of further EIZs

and building on the framework set out in the Energy as an Enabler report recently published by the

Black Country LEPlxxx.

Figure 18 Impacting GVA through regional energy strategy

That report identifies four areas of opportunity (see Figure 18 and Table 1 (Section 2)) and indicative

GVA benefits of £420-£800M through a variety of initiatives including:

1. Additional Energy Innovation Zones.


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2. Strategic infrastructure support for accelerated new market development for locally sourced

products such as electric vehicles and smart connected and low carbon housing.

3. Seeking to establish a legacy bank to cover sunk costs of stranded and legacy energy

infrastructure assets and using this to reduce energy costs for innovative and competitive

manufacturers.

4. Energy efficiency programmes for manufacturing and residential sectors.

5. Simplifying access and improving the transparency of energy markets for business

customers.

6. More rigorous and targeted new build housing energy efficiency standards.

7. Large-scale retrofit programmes for fuel poor households and energy-inefficient housing.

These programmes will need to be developed through appropriate partnerships, for example with

EEF (formerly Engineering Employers’ Federation), West Midlands Housing Officers Group, the West

Midlands Innovation Alliance (especially the Innovative Low Carbon Working Group) and the

Sustainable Housing Action Partnership. The energy strategy will work with the Growth Hub and

LEPs, and through existing working groups wherever possible.

Low carbon and energy technologies are identified as a strategic sector within the regional industrial

strategy (Figure 12). There are a range of cluster support activities underway and about to be

launched, for example supported by Aston Universitylxxxi, Birmingham Universitylxxxii and Climate

KIClxxxiii (Figure 19). Energy Capital will support these initiatives through a dedicated working group,

among which is Climate KIC that is about to start a three-year project to link the cluster development

in Birmingham with best practice in London, Edinburgh, Valencia and Frankfurt.

Figure 19 Access to international best practice networks via Climate KIC


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Roles and responsibilities

EIZs provide a framework for local authorities to control and lead local energy investment activity

within their areas, while establishing a mechanism which enables them to manage risks and to

support appropriate partnerships and expertise alongside and distinct from their existing

organisations. The EIZ structure as set out in the Regional Energy Policy Commission reportlxxxiv is

entirely compatible with the existence of local retail energy companies where Councils are

considering this (for example in Birmingham and Wolverhampton) as these will generally focus on

trading within the current UK energy market structure, while EIZ partnership boards will be focused

on infrastructure investment.

Formally the proposed division of responsibilities for energy is set out in Table 4.

Body Responsibility Accountable to

EIZ partnership board • Energy infrastructure investment and strategic planning within its zone

• Alignment with local plans

Relevant local authority(ies)

Energy Capital • EIZ establishment and monitoring (where regulated powers devolved)

• Funding

• Delivery of regional energy strategy (i.e., specified targets)

• Strategic regional energy planning, where appropriate (e.g., liaison with network operators and national regulator)

WMCA (SEPlxxxv Board)

Local Authorities • Effective delivery of public services, including local energy infrastructure

• Publicly-owned retail energy companies where applicable

Electorate

LEPs • Economic development within strategic sectors, including energy

Members


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Body Responsibility Accountable to

WMCA • Governance of Energy Capital

• Devolved powers over energy as agreed with Whitehall

Mayor and constituent members

Table 4 Roles and responsibilities for energy in the West Midlands

These arrangements are shown schematically in the organisation chart below (Figure 20).

Figure 20 West Midlands Regional Energy Strategy governance

Funding, governance and resourcing

Energy Capital is accountable to the Mayor of the West Midlands through the WMCA and SEP

Strategic Economic Plan) Board. It is a partnership board consisting of key stakeholders established

to ensure effective delivery of the aims of this regional energy strategy in a way that creates an

efficient model for future energy systems governance across the UK19.

Energy Capital will be supported by a small executive, initially funded by partners and located in the

WMCA. Over 18 months we would expect this team to develop to encompass similar responsibilities

and capacity to strategic energy teams in other combined authorities, such as the GLA (which has 25

FTE officers plus two contracted technical support teams and an annual commissioning budget of

19 Ensuring generation, distribution and supply of energy are managed together in an efficient way; and integrating infrastructure planning across housing, economic development, energy, transport, environmental and digital infrastructure.


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around £10M on top of this). A preliminary estimate of the capacity of such a team for the West

Midlands would be around 10-15FTE with an annual operating and commissioning budget of around

£3-£5M. This will need to be detailed and justified as part of the interim executive role.

The four areas of responsibility outlined in Table 4 reflect two fundamental roles:

1. To provide democratic governance and legitimacy to strategic regional energy infrastructure

planning and major investment and cost allocation decisions. These decisions have a

significant impact on the viability of the local industrial strategy, future economic prosperity

of the region, and on domestic energy bills. They often require liaison with local authorities

and national energy system stakeholders such as network operators, the regulator and

major investors.

2. To deliver the agreed regional energy strategy using the framework provided by the EIZs and

working groups, facilitating investment and infrastructure development through

identification, development, funding, support and supervision of designated EIZs.

The scope of the team is thus likely to cover as a minimum distributed energy infrastructure, energy

efficiency including fuel poverty (housing and non-domestic buildings) strategic investment projects,

regional energy data, energy policy and regional energy market regulation.

The Energy Capital Board will provisionally be constituted as follows:

• Chair (from membership)

• Infrastructure providers (4)

• Cadent

• Western Power Distribution

• Customers (6)

• Black Country Housing Group (housing)

• Climate KIC (environment) Engie

• EEF (manufacturers)

• JLR (manufacturer)

• Severn Trent Water

• Local authorities and EIZs (7)

• 1 representative nominated by each LEP

• 1 representative nominated by local authorities per LEP area

• 1 representative nominated by non-LEP WMCA local authorities

• Universities/Innovation (7)

• 1 representative nominated by each contributing university

• Energy Systems Catapult

• National government and stakeholders

• BEIS

• Ofgem

• Sustainable Energy Association

• National Grid

The model and approach is akin to a LEP board but specific to the energy sector.


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Relationship to other regions

The West Midlands is already collaborating internationally in energy through Climate KIC –

particularly with Edinburgh, London, Valencia and Frankfurt – and various university partnerships

with overseas institutions. While developing this strategy Energy Capital has actively engaged and

exchanged notes with Cornwall and West of England devolved authorities as well as the GLA (all of

which have similar political structures and ambitions or experiences in local energy) and intends to

maintain and expand this openness and willingness to share best practice and take it through into

the strategy delivery phase.

Energy Capital welcomes the new regional energy hubs being established by BEIS and looks forward

to supporting the staff allocated to the West Midlands. This region is part of the Midlands Engine

and envisage this being helpful, for example in contexts like MIPIMlxxxvi (where external bodies –

typically with little familiarity with UK regional geography – find it easier to relate to the various

economic regions within the Midlands collectively) provided it doesn’t dilute the focus and efficiency

with which we can deliver.

One of the recommendations of the Regional Energy Policy Commission is that the Energy Systems

Catapult act as a conduit for transfer of best practices around innovation (which is not just what this

strategy is about) so it’s very helpful the Catapult is based in Birmingham. The strategy proposes the

Catapult is invited to become a continuing partner in Energy Capital and represented on the Board

on this basis.


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6. Global best practice

This strategy has been developed over more than two years and informed by support from global

consultancieslxxxvii and individuals from companies with global perspective and presence, as well as

organisations like BEIS, which has a national view; Climate KIC, with a European view; and the

universities across the region, with global views. Energy Capital commissioned a short piece of work

by Sustainability West Midlands to understand what other LEPs nationally were doing on energy.

This has enabled a good sense of best practice nationally and internationally to be compiled.

Much of this work has already been collated and written up for the region as part of the King

Commission Reportlxxxviii which provides an excellent overview and commentary. The following is a

summary only. As mentioned in Section 5, the intention is to keep a strong sense of global

perspective in everything we do in the region, and continuously to adapt and refine the strategy as

we progress through delivery and take on board new ideas and experiences from elsewhere.

At the same time, we and constantly aspire to do better than our competitor economies worldwide

and are comfortable providing leadership where we have distinctive contributions to make. So, we

will seek to develop global best practice and positions of leadership ourselves.

UK examples

Cities which have made significant progress on energy include Bristol, Nottingham, Glasgow and

London.

Bristol and Nottingham have set up retail energy companies. Bristol’s now has over 100,000

customers and Nottingham’s 50,000. Nottingham has recently expanded its offer to Leeds under a

white label scheme20. Both have invested in energy project teams (numbering in 10s of staff) and

have a reasonable pipeline of projects supported by funding from the EU and UK Research and

Innovation (formerly Innovate UK).

Neither have yet managed to achieve the theoretical ideal of linking substantive funding streams

from a successful retail energy company into local energy infrastructure investment. This has limited

the scale of their achievements to modest savings on customer bills (of the order of 10%, or £130-

£190 per household) and modest capital investment projects, of the order of £1-£10M21.

Such achievements are substantial in the context of austerity and the wider challenges facing the

public sector, but nevertheless fall significantly short both of what Bristol and Nottingham

themselves set as targets (Bristol estimates £1 billion of investment is needed in its energy system to

meet its 2050 targets) and what the West Midlands is seeking to achieve through its local industrial

strategy.

Nottingham is hosting an early UK pilot of the Energiespronglxxxix approach to large-scale housing

retrofit, which is of interest to the West Midlands because of its significant fuel poverty challenges

and interest in off-site manufacturing (modern methods of construction). Energiesprong was

20 Much of the evidence in this section is drawn from the work of David Strahan and the West Midlands Regional Energy Policy Commission, whose report was published in March 2018. 21 Ibid.


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introduced to the UK through the West Midlands’ Sustainable Housing Action Partnership and has

been strongly supported from the West Midlands. The Energiesprong board is chaired by Accord

Housing from West Bromwich and off-site manufacturing carried out in Walsall. This is already a

good example of best practice travelling from the Netherlands to the UK via the West Midlands, as

well as ongoing knowledge sharing.

Glasgow has made similar progress to Bristol and Nottingham with a retail energy companyxc, led by

the social housing sector (which is helpful in providing access to a semi-captive customer base, thus

reducing risk) while London has made useful progress in constructively challenging OFGEM around

regulations which inhibit local authorities supporting infrastructure investment ahead of demandxci.

International examples

International examples of progress and innovation in regional energy systems were recently

comprehensively reviewed by the West Midlands Regional Energy Policy Commissionxcii.

Copenhagen, Munich, New York and South Australia are mentioned as regions which have

benefitted substantially from locally-controlled energy investment, but the point is made that in all

these cases the municipalities have far greater statutory powers and responsibilities than their UK

counterparts.

Copenhagen has a history of local investment in integrated energy infrastructure suited to its needs

going back for at least a century. A city region with a population of just under 2 million, its local

authority recently issued a bond of EUR500M solely to finance regional energy projects.

Munich is comparable to the West Midlands in terms of population with an urban core home to 1.5

million people and a wider regional population of 2.65 million people. Interestingly, Munich operates

its transport and energy systems through a single integrated municipal utility, Stadtwerke München,

running a liberalised local energy (and transport) system and market on an entirely commercial basis

and securing revenues of EUR6.5 billion in 2016xciii. Munich has already secured and invested over

EUR3 billion on its local energy system and plans to raise a further EUR3-4 billion shortly.

As the Regional Energy Policy Commission report notes, what all these examples show is the power

of local action to accelerate clean energy deployment and innovation, and to outstrip national

targets. Munich is a good example (with its similar industrial heritage to the West Midlands) and is

currently one of the fastest growing city regions in Germany.


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7. Next steps

This strategy consolidates the findings and recommendations of several reports, including the

Regional Energy Policy Commission Reportxciv, the Arup EIZ Investment Case Reportxcv and the Black

Country Energy as an Enablerxcvi and Powering Growthxcvii reports.

The key next step to take forward the recommendations in these reports is the establishment of a

fully funded delivery body for the region, namely Energy Capital, building on the formal agreement

secured in October 2017 to incorporate this within the WMCA structures.

Energy Capital will then take forward the work programmes agreed between the Mayor, the

government and the LEPs to deliver the various recommendations, broadly following the timescale

set out in Figure 21 below.

Figure 21 High level strategy implementation timeline

Within WMCA/Energy Capital responsibilities, securing substantial funding (of the order of £500M)

to support investment in energy projects across the West Midlands should be a high priority. One

way of doing this would be around a cross-sectoral ‘Growth Deal’ centred on the West Midlands

emerging ‘new energy economy’22.

The second priority is to work with government and regulators to detail the EIZ model for the region,

working with legal experts to ensure an operational level of detail. The Arup report suggests initially

22 The cross-sectoral aspect is the critical automotive, construction and digital elements constantly referenced throughout this strategy and associated reports.


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establishing EIZs as special purpose vehicles (SPVs) which might subsequently take on energy or

other regulatory or financial powers, and which seems a sensible approach to avoid delaying

immediate progress.

The context and framework created by this strategy is designed to facilitate raising a sensible mix of

public and private finance: broadly public investment is appropriate where significant strategic

innovation risk (and consequent social reward) is present23 or there are significant social and health

issues (such as fuel poverty) to be tackled; private finance should be appropriate where the risks are

purely commercial.

A virtue of almost all regional energy projects is, however, that within appropriate regulatory

frameworks – which EIZs should provide – most of this funding should be investable with acceptable

rates of return to the right parties, albeit over relatively long timescales in some cases. This should

limit the need for grant-type funding to targeted public investments designed to overcome market

failures in innovation, early-stage project development and fuel poverty alleviation.

The role of the WMCA in delivering this strategy will therefore be one of facilitation focused on:

• ensuring regional energy infrastructure investment is aligned with strategic regional

industrial, transport, spatial, and productivity and skills plans;

• facilitating regional energy markets which deliver clean, competitive power to businesses

and homes;

• optimising investment in energy infrastructure (including housing energy efficiency) to

reduce fuel poverty, increase industrial competitiveness and productivity, and maximise

economic opportunities for the region;

• securing and managing dedicated investment funds, underpinned by public risk sharing and

anchor funding where appropriate;

• supporting and encouraging innovation (broadly defined) in energy systems, business and

financial models to support this.

In line with other combined authorities, a specialist team in the WMCA is likely to be required from

2019 onwards to deliver this. This is likely to employ around 10-15 people, based on models from

the GLA and elsewhere.

23 The Regional Energy Policy Commission report makes several suggestions on allocation of public funding to support EIZs.


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Appendix I – Sub-regional mapping reports

Most of the local authorities in the West Midlands have renewables and local energy opportunity

maps and studies produced over the past ten years and still hold these. In many cases they hold

detailed housing stock data either because they own their own stock e.g., in Birmingham,

Wolverhampton, Solihull, or because they have carried out HECAxcviii reporting for many years24. The

South of the region including Solihull is particularly strong on supporting and targeting ECO, and has

been a prime user of recent flexibilities introduced into the ECO scheme by government to allow

local authorities to take greater control.

The main issue is not knowing what the project opportunities are, it is securing the local political

consensus, stakeholder support and finance (within appropriate and predictable environments from

the perspective of risk and returns) to make them happen.

This appendix summarises resources known to be available, including the additional Black Country

Mapping report commissioned as part of this project to fill in the one major gap in the region.

Studies of relevance to this strategy are:

Heat network studies part financed by BEIS (HNDU) for:

• Canley

• Dudley

• Sandwell (in progress)

• Solihull

• South Staffordshire

• Warwick (in progress)

• Whitley (in progress)

• Several across Birmingham and Staffordshire (see Figure 22 below)

A comprehensive utilities study for UK Central by Peter Brett Associates (in progress)

A detailed study of Coventry’s energy requirements by Rolton Group (subject to NDA)

GBSLEP Low Carbon Energy Plan 2016 (Gyron LLP) and associated Master planning study

Wolverhampton Renewable Energy and Carbon Reduction Study, Amec Groupxcix

Detailed solar feasibility study for the city of Birmingham.

Various housing studies held by local authorities and the Sustainable Housing Action Partnership,

which runs regional forums for the exchange of best practice in low carbon housing.

24 Some consolidation and digitisation of this data would almost certainly be helpful.


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Figure 22 GBSLEP energy network opportunities

First principles renewables opportunity studies covering all technologies including wind, hydro, solar

and biomass for Birmingham, Warwickshire and Coventry have also been completed in the past 10

years (by Encraft and EST respectively).

The Black Country as a LEP area lacked any overall ‘masterplan’-level assessment of local energy

opportunities and demand. Aecom was commissioned as part of this project to deliver this.c Selected

excerpts from the report are provided to give an indication of the data now available.

The report looked at:

• energy demand patterns and magnitudes across the four metropolitan boroughs;

• energy costs for residential and commercial customers;

• technical and economic opportunities for meeting these needs using:

o district energy schemes;

o solar PV;

o battery storage;

o energy from waste;

o other renewables/nuclear (although it concluded none of these were viable at any

meaningful economic scale).

Detailed maps of demand were produced for each of the four boroughs in the LEP. These are held at

the BCLEP in GIS form and available on request to project developers.


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Figure 23 Sample heat and power demand map

Demand maps were used to develop high level business cases for energy from waste and district

heating schemes.

Figure 24 Energy from waste opportunities in the Black Country


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Some specific private wire opportunities linked to existing energy from waste schemes were also

identified as part of the project. This highlighted the scope for regulatory flexes to make this kind of

efficiency easier to achieve.

Figure 25 Private wire opportunities in the Black Country

At a high level, the report identified the large-scale solar potential of the region, which has large

numbers of warehouses and factories with substantial unshaded roof space. It noted well over

£100M of planning applications had been received for battery storage within the LEP area over the

past two years, probably reflecting financial opportunities arising from national Capacity Markets.

Figure 26 Typical large-scale solar opportunity in the Black Country


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Appendix II – Pilot Energy Innovation Zones and Investment Cases

For reference this appendix provides outline descriptions of the four EIZs (largely) extracted

verbatim from the report of the Regional Energy Policy Commission, March 2018. Investment cases

for the four proposed pilot energy innovation zones are set out in the separate Arup report for this

project.ci Note that EIZ boundaries are subject to change as programmes of projects develop, up to

the point at which any powers are devolved and funding allocated. The descriptions below are

accurate as of March 2018.

The report of the Regional Energy Policy Commissioncii focuses on making the overall case for Energy

Innovation Zones, while the Arup report provides an initial cost-benefit analysis of the specific zones.

It’s important to note that the limitations of Arup’s model prevented detailed or meaningful analysis

of housing energy efficiency opportunities as part of this study. This does not mean housing is not

seen as a critical opportunity in several of the EIZs and across the region more generally (see the

main report) – it simply means that further local work will be required to detail the cost/benefit

cases for housing energy investment. In practice, there are significant opportunities for commercially

viable investment in housing refurbishment in Birmingham, the Black Country and North Solihull in

particular. There are significant opportunities for innovative low carbon new housing in Coventry

and Solihull and the Black Country (and indeed in the 215,000 new houses being built across the

region in the next 15 years).

The four potential EIZs described have been proposed by local communities across the West

Midlands and reflect local needs and perceptions of energy system opportunities and challenges.

This is a critically important feature and point of departure for EIZs: that they are driven not only by

climate imperatives and technical opportunities, but also by local market and customer needs. It

immediately makes them distinct from many demonstration and innovation projects in the energy

sector and aligned with the general shift towards more customer-centric approaches.

Each proposed EIZ presents distinctive opportunities for energy-system innovation, and each is at a

different stage of development. This should help the process of generalising from the West

Midlands’ experience to develop a generic EIZ ‘template’ – meaning an institutional and process

model – that could be rolled out nationally. The philosophy is to be inclusive and offer any

community the opportunity to nominate an area as an EIZ, provided it meets defined criteria such as

willingness to accept innovative low carbon solutions and special regulatory oversight. In this way

EIZs should be seen and designed as a privilege for which areas compete, and a mechanism with

potential significantly to accelerate energy systems transition nationally.

On the other side of the equation, innovators and government will in turn need to accept the

validity, diversity, and importance of local needs in defining the goals of a given EIZ, even where

these needs may not align exactly with national priorities. In some cases, it may be possible to meet

these needs purely through integrating existing technologies in new ways and require no

fundamental technical or product innovation. Such EIZs may still create new markets and industries

simply by providing scale; in other cases, pure process or business model innovation may be

sufficient. All EIZs will accelerate the transition to a low carbon, more competitive energy system in

the UK.


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Black Country

As the seat of the industrial revolution in the late 18th century, the Black Country can claim to be the world’s first ‘energy innovation zone’, and this heritage perhaps explains the enthusiastic local support for the proposed EIZ. But of the four potential EIZs, the Black Country is the least developed, and so provides the greatest opportunity to demonstrate a complete model of how an EIZ can be defined, developed and implemented. There is a strong desire in the area to lead the energy transition by securing investment in modern, clean energy systems which deliver power at globally competitive costs and thus support delivery of the national, as well as local, industrial strategy. The EIZ is intended to provide a focus for this, specifically within the geography of the existing Enterprise Zones.

The Black Country Enterprise Zones comprise a portfolio of sites in Dudley, Wolverhampton, Darlaston and i54 – Wolverhampton North, spread over 120 hectares. ciii civ cv The focus of these zones is to promote and attract advanced manufacturing in the Black Country – by offering competitive advantage to manufacturers who locate there – e specially targeting aerospace, automotive and high added value engineering.

There are major manufacturing companies located on the i54 site, including JLR, Moog, Eurofins and

ISP. This enterprise zone is known as one of the most successful in the UK, and total investment of

more than £1.5 billion is expected across the Black Country over the next 15 years.

A key competitiveness issue for the Black Country is the cost of energy, and in particular the energy

used in metal processing. Manufacturers using electricity to drive their processes are keen to secure

reliable and high-quality energy supplies with predictable and highly competitive pricing.

Figure 27 Breakdown of electricity charges for a large regional manufacturing business, 2017.


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Figure 27 shows a breakdown of the electricity charges paid by one large Black Country

manufacturer in 2017.cvi Only 56% of the cost of energy for this manufacturer is made up of the

payment to the energy supplier. The remaining 44% is the cost of infrastructure (distribution and

transmission use of system and capacity charges) and a share of the costs of the clean energy

transition in the form of renewables and nuclear investment levies (ROCs, FITs and Contracts for

Difference).

This breakdown of charges compares unfavourably with the prices paid by similar industries in

competitor economies, where differential energy pricing is an instrument of industrial strategy. In

countries such as Germany, the Netherlands, France, Italy and Denmarkcvii, some industries pay less

towards infrastructure and energy transitions and domestic consumers pay more. The resulting

contrast in electricity costs for energy intensive industries in the UK, Germany and France is shown

in Figure 28.

Figure 28 International comparison of electricity prices of energy intensive industries, 2015.

If a Black Country EIZ were to propose lowering industrial electricity costs through differential pricing

as in Germany, it would in effect mean loading that cost onto domestic consumers, which would be

politically unacceptable in a region with such high levels of fuel poverty. The prospective role of the

Black Country EIZ would therefore be to reconcile these competing and legitimate concerns through

clean energy innovation.

There are specific opportunities for local generation and supply in the Black Country, and a cluster of

waste-to-energy firms is developing close to the Darlaston sites that need to be integrated with the

LEP’s plan for the region. Private sector investment in this type of activity could be encouraged

through simplification of supply exemptions; support for manufacturers in managing relationships


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with the DNO; local incentives for energy-from-waste technologies; and the public sector taking an

active role in matchmaking between potential generators and industrial energy users. Given the high

density of similar small- and medium-sized metal processing businesses (more than 250 across the

region) there is scope for the Black Country to pioneer the collective use of smart energy data in

optimising energy efficiency, for example by subsidising or mandating installation of smart sub-

metering in industry.


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Coventry and Warwickshire

Coventry and Warwickshire is an example of a potential EIZ driven by a relatively small number of

key stakeholders with a tightly defined agenda: to satisfy strong electricity demand growth and

develop infrastructure to support connected autonomous vehicles (CAVs) in particular. An EIZ could

be used as an effective mechanism to ensure innovation and carbon reduction are effectively built

into development plans, and are properly scrutinised and integrated into local infrastructure.

Figure 29 Proposed Coventry and Warwickshire EIZ

Coventry and Warwickshire EIZ covers Whitley, Baginton, and a wide area around Coventry airport,

incorporating land in Coventry and Warwickshire. This area is well served by transport networks, and

significant growth is planned through developments such the £250M Coventry and Warwickshire

Gateway scheme, and the £500M development of Whitley South – a 60-acre engineering technology

hub next to Jaguar Land Rover’s global headquarters.

There is little spare capacity in the local electricity network, yet demand is forecast to rise

significantly over the next decade. Coventry Central and Coventry and Warwickshire are reaching the

limits their circuits can supply, requiring major reinforcement works to raise capacity. The city

council has investigated options including a new 132 kV bulk supply point to the south of Coventry

and a new super-grid transformer, which would involve significant capital expenditure. Current

regulations do allow capacity to be built ahead of demand, but this requires someone to bear the

risk, and if no entity is willing to, then it could hold up development.

Other areas of planned expansion in Coventry and Warwickshire are Gaydon and Ansty. Jaguar Land

Rover and Aston Martin have plants at Gaydon, which suffers grid constraints that would limit the

growth plans of these and other companies. Ansty has shown considerable growth in recent years

and has potential for large development in the future. Both sites need to ensure adequate power

supply to enable future development. Like UK Central Hub, these areas of economic growth and grid


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constraints need to develop timely and cost-effective clean energy solutions, which an EIZ could

facilitate.


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Tyseley and Birmingham

Birmingham is a well-developed potential EIZ, and the context is a much more established and dense

urban environment, so the needs and opportunities are clearly distinct from those at UKCentral Hub,

which is essentially greenfield. There is not yet a dedicated institutional structure congruent with the

potential zone. There is, however, strong stakeholder and community engagement; a well-defined

and large local market; a portfolio of energy innovation and investment projects at the Tyseley

Energy Park; and 35MW of existing waste-to-energy power plants.

Birmingham city centre will undergo massive redevelopment over the next 15 yearscviii, particularly

around the HS2 Curzon Street station (£900M), Smithfield (£600M), Snow Hill, Typhoo Wharf and

Arena Central. cix The area suffers serious air pollution and the City Council is developing plans for a

Clean Air Zone to start by 2020. This will require the construction of a substantial clean energy

transport refuelling infrastructure, including hydrogen and electric vehicle charging at scale.

There is little space available for vehicle recharging in the city centre. Part of the solution may be to

use the industrial land available at Tyseley, 5km east of the city centre, to produce clean energy for

local communities, and power a new clean transport refuelling infrastructure. Tyseley is already the

site of the city’s energy-from-waste (EfW) plant, which burns 350,000 tonnes of waste per year to

generate 25MWe. The 16-acre industrial site next door is being developed as Tyseley Energy Park by

its owners, Webster and Horsfall, and partners including the University of Birmingham, the City

Council and the Greater Birmingham and Solihull Local Enterprise Partnership.

Key energy challenges and opportunities for an EIZ based around Tyseley and the City Centre

include:

• integrating energy and transport infrastructure developments at a time of rapid change in both sectors;

• optimising use of the city’s 350,000 tonnes of waste which currently pass through Tyseley annually, ensuring neither waste nor energy market regulation inhibits delivery of sensible outcomes;

• making use of the latest clean technologies being developed and deployed by the Universities of Birmingham and Aston at Tyseley and elsewhere;

• making best use of the city’s planning powers to optimise the energy performance of new and existing buildings as more than £2 billion of construction investment flows into the city;

• ensuring the local community is fully engaged in the major changes proposed, and actively contribute to the success of the zone.

The stakeholder group for this EIZ includes the Birmingham City Council Planning and Regeneration

Team, along with key city centre development stakeholders; ENGIE; the University of Birmingham;

and Webster and Horsfall. The Tyseley Energy Park falls within the Tyseley Energy & Environmental

Enterprise District, and the local authority has decided it will become Birmingham’s Energy and

Waste nexus.

Tyseley Energy Park hosts a 10MWe biomass generating plant and private wire electricity supply. It is

the depot for a growing fleet of rent-by-the-hour electric taxis – most of the city’s taxi drivers live


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nearby. A clean energy refuelling station is being built to provide EV charging, hydrogen and CNG for

the city’s bus fleet, and for the refuse vehicles that supply the EfW plant.

Tyseley Energy Park has the potential to become an innovative demonstrator that integrates energy

vectors including electricity, heat, liquid air, and hydrogen. The site will also be home to a University

of Birmingham / Fraunhofer Institute shared research platform and Energy Skills Academy.

Work already completed or ongoing includes:

• Birmingham District Energy Scheme (owned by ENGIE);

• Clean Air Zone / vehicle refuelling recharging studies;

• masterplans for the Tyseley site by owners Webster and Horsfall/Energy Capital;

• heat network project at feasibility Part 1 stage;

• city solar feasibility study completed.

Future plans include recycling waste heat from the EfW plant through a heat pipe to the Birmingham

District Energy Scheme in the city centre, owned and operated by ENGIE. This route would run

through areas of dense housing including many energy-poor households. There may be synergies

with new transport initiatives such as the proposed tram route to the airport, and refuelling and

recharging infrastructure for the city.


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UK Central

UK Central is a well-defined and developed potential EIZ. Local institutional structures to support

major investment and regeneration projects already exist; the location is one of the best current

opportunities in the world to set the benchmark for the type of mixed-use development that can be

delivered around a multimodal transport interchange; and there is strong stakeholder support for

innovation. Significant work has already been undertaken to define future energy and utility

scenarios and potential local investment incentives and value capture mechanisms.

The UK Central Hub is an economic area which includes the significant infrastructure of Birmingham

Airport, National Exhibition Centre, Jaguar Land Rover, Birmingham International Station and

Birmingham Business Park. From 2026 it will include the High Speed 2 rail station and the mixed-use

Arden Cross development. Each of the stakeholders has ambitious growth plans that will increase

the level of employment and housing in the Hub area and support the wider West Midlands

economy. In order to support this opportunity Solihull Council formed the Urban Growth Company

(UGC) to concentrate public sector investment on removing infrastructure constraints.

Figure 30 UK Central Hub

UGC has already done considerable work to develop infrastructure plans for the areacx, and a ‘value

capture’ framework of potential funding mechanisms.cxi It is now investigating potential constraints

in the capacity of utilities to supply the planned developments and has commissioned Peter Brett

Associates (PBA) to analyse current capacity and potential demand over the next 30 years. Initial

discussions with Western Power Distribution and National Grid suggest current spare electricity grid

capacity amounts to 20–25MW at the Elmdon Primary Substation, but that planned developments

may need a further 80MW. This could require an additional primary substation and reinforcement

of the local substations. Without this investment the growth will either stall due to power shortages,

or be delivered at a much slower rate, as the developments need to bear the additional costs of

upgrading the electricity network.


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Electric vehicles could present an even greater challenge to grid capacity. The Hub currently has

around 40,000 car parking spaces, which could rise to over 60,000 in the next 20 years. High level

estimates procured by UGC suggest that if the Hub installs multiple EV charging points it could

require significant additional grid capacity. This estimate is based on private cars only and does not

include an allowance for future electric heavy goods vehicles or aircraft.

No-one yet knows exactly how much impact the planned development and electric vehicles will have

on electricity demand at the Hub, but innovation in supply, control and use must be encouraged if a

system is to be designed in the most economic way.

One potential solution might be to find alternative funding mechanisms to build additional

substation capacity ahead of demand and reserve the capacity for Hub members – like the approach

of the Ebbsfleet Development Corporation, which is investing £30M for new substations to supply

the new garden city in Kent.cxii Another would be to create an Energy Innovation Zone to encourage

lower cost and more innovative solutions. The Hub has many energy-intense users with large peaks

and troughs in demand, and it may be possible to avoid or at least minimise capacity upgrades

through innovative approaches.

The Hub has large heating and cooling loads that could be integrated with the electricity grid and

wider systems such as waste. The scale and concentration of its electricity and thermal demand

creates a huge opportunity for clean energy innovation and building efficiency that will probably be

unmatched in the UK over the next two decades. The Hub has commissioned a Heat Network

Techno-Economic Feasibility Study, due to report later in 2018.

The Hub is only one of UK Central’s four development zones. The others are North Solihull (Zone 2, a

£1.8 billion regeneration programme), Solihull Town Centre (Zone 3, a major retail, office and leisure

destination), and Blythe Valley Park (Zone 4, a business park). Each has its own energy challenges

and priorities. North Solihull, for example, must regenerate large numbers of 1950s/60s housing

stock in Chelmsley Wood, where there are high levels of fuel poverty. Solihull Town Centre has

recently completed a feasibility study that identified a low carbon heat network opportunity that

would be technically and economically viable. Blythe Valley has the potential to develop a hydrogen

hub. Each could therefore form its own EIZ, but there may also be a case for creating a single

overarching EIZ to cover all four UK Central development zones.


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Appendix III – Consultation responses and attendees at the

stakeholder engagement event

A stakeholder engagement event was held on Tuesday 6 March 2018 at the Energy Systems Catapult

in Birmingham. The event was open, widely publicised, and every local authority in the region was

invited directly, along with neighbouring LEPs, all existing Energy Capital partners, regional

universities and members of relevant regional networks.

In addition, the draft strategy was released for consultation from March to May 2018. Further

responses were received from ten organisations and individuals included in the list below.

Act on Energy

AECOM

Aston University

BEIS

Birmingham City Council Black Country Citizens Cadent

City of Wolverhampton Council

Climate KIC

Coventry City Council

Daikin Air Conditioning UK Ltd

Dudley MBC

E.ON UK

Ecuity

EEF Ltd

Energy Systems Catapult

EnergyHarmonics Ltd

Engie UK George Simms Greater Birmingham and Solihull Local Enterprise Partnership HS2 Ltd International Synergies Ltd Jaguar Land Rover Lichfield District Council

Manufacturing Technology Centre

MEBC The Metals Council Midlands Engine

Oersted

Sandwell MBC

Severn Trent The Sustainable Housing Action Partnership Solihull Metropolitan Borough Council

Sustainability West Midlands


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Tyseley Energy Park

University of Birmingham

Birmingham Energy Institute

University of Warwick

Western Power Distribution WPD


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References

i https://www.westernpower.co.uk/docs/About-us/Our-business/Our-network/Strategic-network-investment/West-Midlands/West-Midlands-scenarios-accompanying-report.aspx ii https://www.wmca.org.uk/media/1713/wmca-economic-review.pdf iii West Midlands Combined Authority Strategic Economic Plan, WMCA, https://www.wmca.org.uk/what-we-do/strategy iv https://www.wmca.org.uk/media/1713/wmca-economic-review.pdf v https://historywm.com/articles/the-west-midlands vi https://oldbike.wordpress.com/7-bicycles-manufactured-in-coventry/ vii http://www.sustainabilitywestmidlands.org.uk/wp-content/uploads/SWM-Energy-Commission-6-10-17.pdf viii A Science & Innovation Audit for the West Midlands, June 2017, WMCA, https://www.wmca.org.uk/media/1682/west-midlands-sia-final-for-publication-21617.pdf ix https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwjihoOu7KzYAhWJLFAKHf9QCBwQFgguMAE&url=https%3A%2F%2Fwww.uktradeinfo.com%2FStatistics%2FRTS%2FRTS%2520Releases%2FRTS_Q2_2017.pdf&usg=AOvVaw25Z1KNSr6vOhlI_4SoCuYL x http://fortune.com/2017/02/09/study-china-will-overtake-the-u-s-as-worlds-largest-economy-before-2030/ xi https://www.ft.com/content/908ba3d0-75da-11e6-b60a-de4532d5ea35 xii A Science & Innovation Audit for the West Midlands, June 2017, WMCA,

https://www.wmca.org.uk/media/1682/west-midlands-sia-final-for-publication-21617.pdf

xiii https://www.birmingham.gov.uk/info/50065/population_and_census/1003/population_in_birmingham/1 xiv A Science & Innovation Audit for the West Midlands, June 2017, WMCA, https://www.wmca.org.uk/media/1682/west-midlands-sia-final-for-publication-21617.pdf xv This data is sourced from BEIS, DECC, the Digest of UK Energy Statistics, The Office of National Statistics and OFGEM. GVA figures are from a SIC code analysis by Charlie Hopkirk for BCLEP. xvi Helm, Cost of Energy Review, BEIS 2017 xvii ibid xviii Frauenhofer ISI and Ecofys, Electricity Costs of Energy Intensive Industries, An international comparison, 2015 xix Source: Actual bills of a metal processing business, November 2017, obtained for this project. xx See, for example, file:///C:/Users/User/Downloads/Reducing-Energy-Policy-Costs_UK-Steel-Guide-to-Compensation-and-Exemptions-for-the-Steel-Sector%20(2).pdf; xxi Helm, Cost of Energy Review, BEIS 2017 xxii Digest of UK Energy Statistics (DUKES) BEIS 2017 xxiii DUKES 2015 (The most recent year regional data is available). xxiv https://www.birminghammail.co.uk/news/midlands-news/one-four-private-rented-homes-14856794 xxv https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/ 65602/6927-energy-efficiency-strategy--the-energy-efficiency.pdf xxvi http://www.billhelp.uk/west-midlands-hit-hard-fuel-poverty/ xxvii https://www.gov.uk/government/publications/west-midlands-housing-package xxviii https://shap.uk.com/resources/ xxix https://www.theccc.org.uk/wp-content/uploads/2016/10/Annex-3-Best-practice-in-residential-energy-efficiency-policy-Committee-on-Climate-Change-October-2016.pdf xxx http://www.lse.ac.uk/GranthamInstitute/research/economic-analysis-of-energy-efficiency/ xxxi This data is mostly from government sources, primarily UK Energy Investment, DECC, 2014. xxxii https://www.citb.co.uk/documents/research/csn_reports_2018-2022/2018csn_wm_summary_050218.pdf xxxiii WMCA Productivity and Skills Commission, Sector Outline (Charlie Hopkirk) xxxiv West Midlands Science and Innovation Audit, 2017. https://www.wmca.org.uk/media/1682/west-midlands-sia-final-for-publication-21617.pdf

https://www.wmca.org.uk/what-we-do/strategy

https://www.wmca.org.uk/what-we-do/strategy

http://www.sustainabilitywestmidlands.org.uk/wp-content/uploads/SWM-Energy-Commission-6-10-17.pdf


https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwjihoOu7KzYAhWJLFAKHf9QCBwQFgguMAE&url=https%3A%2F%2Fwww.uktradeinfo.com%2FStatistics%2FRTS%2FRTS%2520Releases%2FRTS_Q2_2017.pdf&usg=AOvVaw25Z1KNSr6vOhlI_4SoCuYL



http://fortune.com/2017/02/09/study-china-will-overtake-the-u-s-as-worlds-largest-economy-before-2030/

https://www.ft.com/content/908ba3d0-75da-11e6-b60a-de4532d5ea35



https://www.citb.co.uk/documents/research/csn_reports_2018-2022/2018csn_wm_summary_050218.pdf


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xxxv Warwick Institute for Employment Research, https://warwick.ac.uk/fac/soc/ier/ngrf/lmifuturetrends/sectorscovered/energy/regional/west-midlands/ xxxvi Energy and Utility Skills, 2018. http://www.euskills.co.uk/2018/02/09/skills-strategy-impacts-energy-utilities-sector-ahead-first-anniversary/ xxxvii Sustainability Challenges in the West Midlands, Sustainability West Midlands, December 2010, http://www.sustainabilitywestmidlands.org.uk/wp-content/uploads/Sustainability-Challenges-in-the-West-Midlands.pdf xxxviii http://www.who.int/mediacentre/news/releases/2014/air-pollution/en/ xxxix Valuing impacts on air quality: Updates in valuing changes in emissions of Oxides of Nitrogen (NOX) and concentrations of Nitrogen Dioxide (NO2) , Defra, September 2015, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/460401/air-quality-econanalysis-nitrogen-interim-guidance.pdf xl https://www.gov.uk/government/news/improving-air-quality-in-cities xli Energy as an Enabler, Linkages between Regional Energy Strategy, Productivity and Growth, March 2018. xlii Business cases for Energy Innovation Zones in the West Midlands, Arup, March 2018 xliii https://www.wmca.org.uk/media/1713/wmca-economic-review.pdf xliv Based on National Grid Future Energy Scenarios – low estimates are ‘two degrees’ and ‘slow progression’ scenarios; higher estimates are ‘steady state’ and ‘consumer power’ scenarios. xlv The 8TWh figure is obtained by taking 7% of the projected national increase in energy demand according to National Grid. The 7% figure is from Western Power and is the 2017 share of national electricity demand from the West Midlands. xlvi https://www.westernpower.co.uk/docs/About-us/Our-business/Our-network/Strategic-network-investment/West-Midlands/West-Midlands-scenarios-accompanying-report.aspx xlvii http://www.billhelp.uk/west-midlands-hit-hard-fuel-poverty/; https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/533056/Fuel_poverty_Sub-regional_report_2016.pdf xlviii

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/533056/Fuel_poverty_Sub-regional_report_2016.pdf xlix https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/ 696448/ ECO3_consultation.pdf l https://www.westernpower.co.uk/docs/About-us/Our-business/Our-network/Strategic-network-

investment/West-Midlands/West-Midlands-scenarios-accompanying-report.aspx. Note that this report covers the West Midlands as defined by WPD, which excludes Coventry and includes large parts of the Marches and areas to the South West which have never been in any government definition of the West Midlands, such as Gloucestershire. However, having said this the net effect in terms of gross housing investment figures and associated demand (for example) is negligible, as the total planned new housing is around 200,000 homes for either geographical definition. In other words, the net economic activity covered by the report is very similar, and the major economic hubs of Birmingham, the Black Country and UK Central and Solihull are common to both regional definitions. li https://www.nationalgrid.com/uk/publications/future-energy-scenarios-fes lii https://www.birmingham.ac.uk/Documents/college-eps/energy/Publications/Fuel-Cell-and-Hydrogen-

brochure.pdf liii An initial trial of 20 buses was approved in October 2017 by Birmingham City council. liv Dieter Helm, Cost of Energy Review, BEIS, 2017. lv International Renewable Energy Agency, 2016 lvi Digitization and Energy, IEA, 2017. http://www.iea.org/digital/ lvii Global Infrastructure Outlook, Oxford Economics, 2017. Also

http://www.worldbank.org/en/news/feature/2014/09/24/new-report-identifies-major-clean-tech-market-opportunity-for-small-businesses-in-developing-countries; https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/energy-infrastructure-seizing-the-opportunity-in-growth-markets; https://www.businessgreen.com/bg/news/3021679/bnef-global-energy-storage-market-to-double-six-times-by-2030;

http://www.sustainabilitywestmidlands.org.uk/wp-content/uploads/Sustainability-Challenges-in-the-West-Midlands.pdf

http://www.sustainabilitywestmidlands.org.uk/wp-content/uploads/Sustainability-Challenges-in-the-West-Midlands.pdf

http://www.who.int/mediacentre/news/releases/2014/air-pollution/en/

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/460401/air-quality-econanalysis-nitrogen-interim-guidance.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/460401/air-quality-econanalysis-nitrogen-interim-guidance.pdf

https://www.gov.uk/government/news/improving-air-quality-in-cities

http://www.billhelp.uk/west-midlands-hit-hard-fuel-poverty/

https://www.westernpower.co.uk/docs/About-us/Our-business/Our-network/Strategic-network-investment/West-Midlands/West-Midlands-scenarios-accompanying-report.aspx

https://www.westernpower.co.uk/docs/About-us/Our-business/Our-network/Strategic-network-investment/West-Midlands/West-Midlands-scenarios-accompanying-report.aspx

http://www.worldbank.org/en/news/feature/2014/09/24/new-report-identifies-major-clean-tech-market-opportunity-for-small-businesses-in-developing-countries

http://www.worldbank.org/en/news/feature/2014/09/24/new-report-identifies-major-clean-tech-market-opportunity-for-small-businesses-in-developing-countries

https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/energy-infrastructure-seizing-the-opportunity-in-growth-markets

https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/energy-infrastructure-seizing-the-opportunity-in-growth-markets

https://www.businessgreen.com/bg/news/3021679/bnef-global-energy-storage-market-to-double-six-times-by-2030

https://www.businessgreen.com/bg/news/3021679/bnef-global-energy-storage-market-to-double-six-times-by-2030


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lviii Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy

Commission, Chaired by Prof. Sir David King, March 2018 lix See for example: https://www.nao.org.uk/wp-content/uploads/2017/03/Capability-in-the-civil-service.pdf;

https://www.instituteforgovernment.org.uk/sites/default/files/publications/20130621%20-%20Capabilities%20Discussion%20Paper%20-%20final.pdf lx http://www.globalenergyblog.com/failure-of-competition-in-retail-energy-markets-disengaged-customers-

still-the-root-cause lxi See http://www.scmp.com/business/companies/article/2051139/driving-innovation-lessons-integration-teslas-elon-musk lxii https://publications.parliament.uk/pa/cm201213/cmselect/cmsctech/348/34805.htm lxiii http://www.imperial.ac.uk/media/imperial-college/research-centres-and-groups/icept/Innovation-review---ICEPT-working-paper-version-(16.05.12).pdf lxiv For more detail, see https://www.wmca.org.uk/who-we-are/structure lxv https://www.bdo.co.uk/en-gb/news/2017/number-of-manufacturers-in-west-midlands-grows lxvi https://www.regulation.org.uk/specifics-energy-history1.html lxvii https://uk.reuters.com/article/uk-britain-energy-ofgem/uk-energy-price-cap-could-be-in-place-by-christmas-2018-idUKKBN1EZ159 lxviii https://ore.exeter.ac.uk/repository/bitstream/handle/10871/28455/Governance%20of%20industry%20rules%20and%20%20energy%20system%20innovation.pdf?sequence=1 lxix Dieter Helm, Cost of Energy Review, BEIS, 2017. lxx http://projects.exeter.ac.uk/igov/new-thinking-ofgem-has-to-be-reformed-if-gb-is-to-meet-its-energy-policy-goals/ lxxi Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 lxxii This figure is based on the report by Arup, Business Cases for Energy Innovation Zones in the West Midlands, March 2018. lxxiii https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/639118/Fuel_Poverty_Statistics_Report_2017_revised_August.pdf lxxiv https://www.theccc.org.uk/publication/2017-report-to-parliament-meeting-carbon-budgets-closing-the-policy-gap/ lxxv https://www.blackcountrylep.co.uk/upload/files/NewFolder/Energy%20as%20an%20Enabler.pdf lxxvi Business cases for Energy Innovation Zones in the West Midlands, Arup, March 2018 lxxvii UK automotive turnover (SMMT, 2015). The figure of £32bn is calculated from UK sales only (£37.3bn p.a

multiplied by 7.3% as the WM share of the national economy, to give £2.72bn new car sales per year in the

region.) lxxviii Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 lxxix Business cases for Energy Innovation Zones in the West Midlands, Arup, March 2018 lxxx https://www.blackcountrylep.co.uk/upload/files/NewFolder/Energy%20as%20an%20Enabler.pdf lxxxi http://bioenergy-for-business.org/ lxxxii https://www.birmingham.ac.uk/Documents/partners/ERDF-marketing-FINAL-for-web.pdf lxxxiii http://www.climate-kic.org/news/west-midlands-energy-climate-innovation-cluster/ lxxxiv Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 lxxxv SEP stands for Strategic Economic Plan or Industrial Strategy Board lxxxvi MIPIM is a major global property investment conference, where the East and West Midlands have successfully exhibited together for several years. lxxxvii Arup, Aecom lxxxviii Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 lxxxix http://www.energiesprong.uk/ xc https://our-power.co.uk/

https://www.nao.org.uk/wp-content/uploads/2017/03/Capability-in-the-civil-service.pdf


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xci Energy as an Enabler, Linkages between Regional Energy Strategy, Productivity and Growth, March 2018. xcii Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 xciii https://www.swm.de/dam/swm/dokumente/english/swm-annual-report-2016.pdf xciv Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy Commission, Chaired by Prof. Sir David King, March 2018 xcv Business cases for Energy Innovation Zones in the West Midlands, Arup, March 2018 xcvi Energy as an Enabler, Linkages between Regional Energy Strategy, Productivity and Growth, March 2018 xcvii Powering Growth – A Black Country Energy Strategy, Aecom, February 2018 xcviii Home Energy Conservation Act: A requirement on local authorities to monitor the energy efficiency performance of all housing, including private housing, in their areas. Variably observed. xcix http://www.wolverhampton.gov.uk/CHttpHandler.ashx?id=1567&p=0 c Powering Growth – A Black Country Energy Strategy, Aecom, February 2018 ci Business cases for Energy Innovation Zones in the West Midlands, Arup, March 2018 cii Powering West Midlands Growth: A Regional Approach to Clean Energy Innovation, An Energy Capital Policy

Commission, Chaired by Prof. Sir David King, March 2018 ciii http://www.investblackcountry.com/investment-opportunities/industrial/gasholders/ civ http://www.investblackcountry.com/investment-opportunities/industrial/i54/ cv http://www.investblackcountry.com/investment-opportunities/industrial/phoenix-10/ cvi Actual figures, calendar year 2017, for a large metalworking business. cvii Electricity Costs of Energy Intensive Industries, An international comparison, Ecofys and Frauenhofer ISI, 2015. cviii https://bigcityplan.birmingham.gov.uk/ cix https://www.birmingham.gov.uk/downloads/download/155/birmingham_curzon_hs2_masterplan_for_growth cx http://www.ugcsolihull.uk/publications/ cxi http://www.ugcsolihull.uk/wp-content/uploads/2017/09/170919-Value-Capture-Framework.pdf cxii http://ebbsfleetdc.org.uk/2017/07/27/future-of-electricity-supplied-to-ebbsfleet-garden-city-has-been-secured-in-a-ground-breaking-30million-deal/

http://www.investblackcountry.com/investment-opportunities/industrial/gasholders/

http://www.investblackcountry.com/investment-opportunities/industrial/i54/

http://www.investblackcountry.com/investment-opportunities/industrial/phoenix-10/

https://bigcityplan.birmingham.gov.uk/

https://www.birmingham.gov.uk/downloads/download/155/birmingham_curzon_hs2_masterplan_for_growth

https://www.birmingham.gov.uk/downloads/download/155/birmingham_curzon_hs2_masterplan_for_growth

http://www.ugcsolihull.uk/publications/

http://www.ugcsolihull.uk/wp-content/uploads/2017/09/170919-Value-Capture-Framework.pdf

http://ebbsfleetdc.org.uk/2017/07/27/future-of-electricity-supplied-to-ebbsfleet-garden-city-has-been-secured-in-a-ground-breaking-30million-deal/

http://ebbsfleetdc.org.uk/2017/07/27/future-of-electricity-supplied-to-ebbsfleet-garden-city-has-been-secured-in-a-ground-breaking-30million-deal/

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GREATER BIRMINGHAM AND SOLIHULL LEP

BOARD MEETING

13th September 2018

Foreign Direct Investment Update

Recommendations 1. The Board is asked to note:

1.1 the improved FDI numbers for 2017/18 and contribution to private sector job creation, particularly higher GVA generating roles;

1.2 the trends and challenges outlined in the paper, particularly the pressure to develop and convert a strong pipeline of opportunities going forwards in both services and manufacturing;

1.3 the significance of the LEP’s support for automotive and advanced engineering lead generation in this context and the progress made in Year 1 to generate new prospects which will be built on in Year 2.

Background 2016/17 Context

2. The Brexit referendum has had a significant impact on FDI across the UK including in the GBSLEP area. In light of the challenging conditions, the WMGC, operating under the Business Birmingham brand, repositioned its offer to maintain investment into the region and adopted the following approach:

a) A focus on UK (and GBS LEP) market specific opportunities:

o HS2 supply chain o Food & Drink – A growing UK population means increasing market

opportunities in the sector. o JLR supply chain.

b) BPFS sector – positioning Birmingham as a talent rich, cost-competitive

and less risky alternative to London for UK focussed activities. c) Tech/ digital sector – targeting SMEs via investors and key intermediaries

as well as larger fintech companies such as ‘Advanced’.

d) Life Sciences – focussing promotion on devices and diagnostics as part of a campaign to SME investors in key markets.

e) Investor Development – ensuring appropriate account management of

strategic companies including FDI investors (in partnership with DIT) to support growth and expansion investment projects.

2017/18 Results

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05/09/2018 2 of 5

3. According to DIT figures, the national results for FDI were down 9%, with the West

Midlands bucking this trend with a 13% increase. The GBS LEP region performed particularly strongly, securing 89 projects (including 13 projects which included more than one LEP area), 3138 new and 10 safeguarded jobs. This represents a 17.5% increase in jobs on the previous year, and a 20% increase in projects.

4. The top country for investment continued to be the USA, with Germany falling from 2nd to 3rd place, reflecting the caution of German investors to commit investment in light of the uncertainty over Brexit.

Country Projects New Jobs USA 26 1215 Netherlands 9 294 Germany 7 130 Canada 6 219 India 6 66

5. The GBS LEP area generated 64% of the projects in the WMCA area and 40% of

its jobs. The job numbers in 2017/18, though improved, were still not as high as the three years preceding the Brexit vote as can be seen in Appendix 1.

6. The reasons for this stem mainly from the decline in the automotive sector from fy

16/17 onwards (Appendix 1). Approximately half of all exports from the West Midlands region are cars. Any obstacles that make vehicle manufacture and trade more difficult in this sector will have a proportionally larger effect on this region.

7. There has been a strong performance in the BPFS, advanced engineering and

tech sectors (Appendix 1), which has helped offset the decline in the automotive sector, achieving an upward trend in fy 17/18. 942 jobs were secured in advanced engineering, with a high proportion of these linked to the development of HS2.

8. Jobs created by FDI in 2017/18 were in predominantly high skilled, higher value

sectors achieving a greater GVA per employee than either the GBS LEP or national average.

Jobs created by inward investment - average GVA per employee £76,189 Current GBSLEP average £50,318 Current UK average £56,647

Key Issues 9. It is anticipated that the automotive sector will continue to face challenges in

2018/19. According to recent figures from KPMG, total investment in automotive fell from £2.6bn in 2015 to £1.1bn in 2017. Uncertainty around tariffs and Brexit are likely to be exacerbated by wider changes in societal demand linked to the development of connected and autonomous vehicles, electric vehicles and power trains and the trend towards mobility as a service rather than automotive ownership models.

10. The Board is asked to note that the LEPs on-going support for funding lead generation across both the automotive and advanced engineering sectors, will support the region to compete in these increasingly challenging conditions.

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Significant progress has been made in Year 1 to develop a pipeline of investments (122 prospects generated against a target of 108 by the end of May) which the second years’ activity will focus on converting into completed projects.

11. The recent diversification in the GBS LEP area towards a more service based

economy is helping the region weather the increased pressures created by Brexit uncertainty. However, the Board is asked to note that, with some exceptions, Tech & Digital and BPFS investments tend to generate fewer jobs per project than manufacturing; therefore a greater pipeline of opportunities will need to be created and converted to maintain this momentum.

12. A comparison between WMGC’s activity against 2 comparator investment

agencies - MIDAS in Manchester and Scottish Enterprise evidences the effectiveness of the Business Birmingham activity. The table shows that in 2017-2018, despite a much smaller budget than competitor destinations, the WMGC/Business Birmingham achieved higher levels of success in terms of the number of projects attracted per £m of budget. At 23 projects, this ratio is more than double that achieved by MIDAS and almost double that achieved by Scottish Enterprise.

Investment agency

2017-2018 budget (£m)

Inward investment projects landed (involved successes)

Projects per £m

WMGC/Business Birmingham 1.86 43 23

MIDAS 5.75 66 11 Scottish Enterprise 9.5 115 12

Conclusion 13. Increasing levels of private sector jobs is one of the core goals of the GBS LEP’s

SEP. This report outlines how a strong FDI performance for fy 17/18, aided by GBS LEP support for lead generation, has contributed to this target. It is envisaged that conditions in FY. 19/20 will be as challenging. However ongoing opportunities from HS2 and other UK market-specific opportunities where the GBS LEP area has a compelling proposition coupled with WMGC’s proactive and intelligence led approach to identifying and securing inward investment, should ensure a continued positive year ahead.

14. By attracting high value added, highly skilled and well paid jobs in sectors with

high rates of GVA generation per employee, the FDI performance is also making a significant contribution to the SEP objective of raising productivity across the region.

Prepared by: Nicola Hewitt, Commercial Director, Marketing Birmingham

0121020205051 / [email protected]

Date Created: 31/08/18 Appendix 1


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Table 1 - FDI Jobs Created by WMCA LEP Area

Table 2 - FDI Trends by Sector

Table 3 – Jobs Created by Sector

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Item 12


BOARD MEETING

13 September 2018

STRENGTHENED LOCAL ENTERPRISE PARTNERSHIPS

Recommendations The Board is recommended to:

1. Note the publication of Strengthened Local Enterprise Partnerships and the recommendations set out therein;

2. Note and comment on the current status of GBSLEP with regard to the requirements; and

3. Delegate authority to Tim Pile to approve the proposal on geography for submission by 28 September, and the Implementation Plan by 31 October, on behalf of the Board.

Background

4. On 24 July 2018, Government published Strengthened Local Enterprise Partnerships, which sets out the role and responsibilities of Local Enterprise Partnerships in driving local growth, and how government and Local Enterprise Partnerships will work together to strengthen leadership and capability, improve accountability and manage risk, and provide clarity on geography. A briefing note, setting out the key issues, is attached as Appendix A.

5. GBSLEP is developing an implementation plan for submission to Government at the end of October and is working closely with local authorities, neighbouring LEPs and WMCA in doing so. GBSLEP’s current position against each of the recommendations is shown in Appendix B.

Key issues 6. As set out in Appendix B, GBSLEP is in a strong position to respond to the

report and the majority of the recommendations are met, or partially met. However, there are three key issues that GBSLEP must resolve.

7. By 28 September 2018, submit a proposal which best reflects our functional economic area and removes overlaps, while considering the relationship between the Combined Authority and LEP geographies. Future capacity funding to implement the reforms is contingent on meeting this requirement.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/728058/Strengthened_Local_Enterprise_Partnerships.pdf


Item 12

8. By 31 October 2018, submit a plan to increase representatives from the private sector so that they form at least two thirds of the Board by 31 March 2020, which can have a maximum of 20 permanent appointments.

9. By 31 October 2018, submit a plan to improve the Board’s gender balance and representation of those with protected characteristics, to ensure that at least one third of a LEP’s appointed board members are women by April 2020 (with equal representation of men and women by April 2023).

10. Consideration is being given to these issues as proposals are developed for submission by the respective deadlines (following significant stakeholder engagement); a further presentation will be provided at the meeting for discussion.

11. While proposals must be submitted by 31 October, the lead-in time for any changes is quite lengthy. The Executive is therefore clear that GBSLEP’s focus must be on its delivery plans, and that implementing the requirements of the report must not distract from doing so.

Conclusion 12. This paper sets out the implications of Strengthened Local Enterprise

Partnerships, provides a status report on GBSLEP’s current position and seeks delegated authority to Tim Pile to sign off the proposals on behalf of the Board.

Prepared by: Nick Glover Executive Manager


07730 281 420

Date: 4 September 2018


Briefing


Following the Ministerial Review of LEPs, Government has published Strengthened Local Enterprise Partnerships which sets out how Government will work with LEPs to develop and deliver modern Industrial Strategy.

The report sets out a series of reforms of leadership, governance, accountability, financial reporting and geographical boundaries of LEPs. It includes a series of Government commitments and additional changes that Government will work with LEPs to implement:

o Consistent role and responsibilities of LEPs, focused on enhancing productivity and driving Industrial Strategy, in the context of the forthcoming UK Shared Prosperity Fund

o More representative Boards of a maximum of 20 persons, two thirds of which should be from the private sector, and with improved gender balance and better representation of protected characteristics

o A greater emphasis on consulting local stakeholders

o LEP secretariats to be independent of local government

o LEPs to have legal personalities (i.e. companies)

o LEPs to actively participate in local authority scrutiny panel enquiries

o Revised geographies that reflect functional economic areas, removing overlaps

o Potential co-terminosity with and a clear, distinct role vis-à-vis Mayoral Combined Authorities

A number of milestones for implementation are set out in the report, as follows:

o Proposals for revised geographies by 28 September 2018

o Detailed plans for implementation by 31 October 2018

o First round of Local Industrial Strategies Strategies (inc. West Midlands) by March 2019

o LEP delivery plans in place by April 2019

o “Legal personalities” (i.e. company structures) in place by April 2019

o Revised local Assurance Frameworks in place by April 2019

o Local Industrial Strategies agreed by early 2020

o Revised geographies to come into effect by Spring 2020

o Improved gender balance of Boards by 2020, building towards equal representation by 2023

£20m is available nationally over 2018 – 2020 to build LEP capacity and implement the reforms.

GBSLEP is developing an implementation plan for submission to Government at the end of October and is working closely with local authorities, neighbouring LEPs and WMCA in doing so.



Item 12 Appendix B


IMPLEMENTATION PLANNING

Review chapter Recommendation Information required Status & comment

Geography As Local Enterprise Partnerships are central to future economic growth, Government will ask Local Enterprise Partnership Chairs and local stakeholders to come forward with considered proposals by the end of September on geographies which best reflect real functional economic areas, remove overlaps and, where appropriate, propose wider changes such as mergers. These proposals should be submitted by 28 September 2018. Government will respond to these proposals in the autumn and future capacity funding will be contingent on successfully achieving this.

All LEPs should outline their response to the Government’s recommendations on geography no later than 28 September 2018. For LEPs who are proposing no changes to their geographical boundaries, they should respond outlining why no change is required. Those LEPs proposing geography changes should provide detail of the proposed changes. In their response they should outline why these changes would be suitable for their local area. These proposals should include timescales for the transition to different geographies.

For LEPs in Mayoral Combined Authority (MCA) areas, these proposals should consider the appropriateness of the current relationship between the MCA and LEP geographies.

This recommendation is not currently met.

Six of GBSLEP’s nine districts are currently in two LEPs:

• Cannock Chase (Stoke & Staffs)

• Lichfield (Stoke & Staffs)

• Tamworth (Stoke & Staffs)

• Bromsgrove (Worcestershire)

• Redditch (Worcestershire)

• Wyre Forest (Worcestershire)

Furthermore, three of those six are non-constituent members of the West Midlands Combined Authority (Cannock Chase, Tamworth and Redditch).

GBSLEP has worked closely with partners to consider this recommendation and a presentation will be given to the Board on 13 September for further discussion.

Item 12 Appendix B


Roles & responsibilities

Government will work with LEPs to develop a Local Industrial Strategy that sets out a collective and shared strategic course for the long term.

Within the implementation plan, the LEP should set out the work it is undertaking and its future plans to develop its evidence base for their area’s future Local Industrial Strategy.

This recommendation is met.

GBSLEP is already working closely with neighbouring LEPs and the West Midlands Combined Authority to develop Local Industrial Strategy, with each LEP leading on particular sectors.

We expect all LEPs will follow best practice within the sector and produce an annual delivery plan and end of year report.

Within the implementation plan, the LEP should outline its plans to draft and publish an annual delivery plan by April 2019 and an end of year report at the end of the 2019-20 financial year.

Government will work with LEPs to develop qualitative and quantitative measures to report against in their delivery plans and end of year reports. The implementation response should provide a commitment to adopt and report against agreed key performance indicators. The LEP Network will work with LEPs over the summer to identify best practice, which will be shared amongst the network.

This recommendation is partially met.

GBSLEP already has a number of delivery plans and an annual budget, which form the basis of an annual delivery plan. The Executive will ensure that, for 2019/20, they are collated into an annual delivery plan.

GBSLEP already produces an Annual Report and will ensure that the cycle of publication fits with the annual delivery plan.

GBSLEP is currently developing its own qualitative and quantitative measures and will consult with Government and the LEP Network to ensure that appropriate measures are agreed.

Item 12 Appendix B


Leadership and organisational capacity

Government expects that each LEP consults widely and transparently with the business community before appointing a new Chair, and appoints a Deputy Chair.

Within the implementation plan, LEPs should outline their draft proposed process for consultation of the business community before appointing a new Chair. LEPs should plan to have this process in place by March 2019.

This is partially met.

GBSLEP has a Chair and Deputy Chair.

GBSLEP appoints its Board Directors – including its Chair – through an open and transparent process. The Executive is awaiting guidance on what form consultation with the business community should take.

In line with best practice in the private sector, LEPs will want to introduce defined term limits for Chairs and Deputy Chairs where these are not currently in place.

Within the implementation plan, LEPs should outline their proposed plans to introduce defined term limits for Chairs and Deputy Chairs. LEPs should plan to have this process in place by March 2019. LEPs should also plan to have a Deputy Chair in place by March 2019.

This requirement is met.

Government’s aspiration is that LEPs will work towards strengthening the representation from the private sector, increasing representatives from the private sector so that they form at least two thirds of the Board, to ensure that each LEP can truly be said to be business-led. In order to maintain focused board direction and input, Government will work with LEPs to establish a maximum permanent board of 20 people, with the option to co-opt an additional five board members with specialist knowledge on a one year basis.

Within the implementation plan, LEPs should outline any changes they plan to make to the composition of their board to meet the review recommendations. As part of this they should outline:

• How they plan to increase the private sector board membership to 2/3 private sector

• How they will ensure that their board that their board does not exceed a maximum of 20 persons

• Arrangements for co-opted members (if applicable)

LEPs should outline how they plan to achieve this board composition over time, for example, in phases. LEPs should plan to have implemented any changes needed to the composition of their board by the end of the financial year 2019-20.

This requirement is not currently met.

The LEP Board currently has 20 Non-Executive Directorships (and 19 NEDs in post), 9 of which (or 11, if HE/FE is included) are from the private sector. The balance is therefore 45% or 55% respectively.

The Executive will develop a proposal to review Board composition in 2018/19, with a view to implementing throughout 2019/20.

Item 12 Appendix B


Leadership and organisational capacity

Government expects refreshed LEP boards to improve their gender balance and representation of those with protected characteristics. Our overall expectation is for LEP boards to eventually have equal representation of men and women by 2023. As a step towards achieving this, we will replicate the target set in the Hampton-Alexander Review for FTSE 350 boards, and require that action is taken by 2021 so that women make up at least one third of LEP boards.

All LEPs should aspire to achieve a gender balanced board. The implementation plan should include detail on plans to:

• Take action to ensure that at least one third of a LEP’s appointed board members are women by April 2020.

• Take action to ensure equal representation of men and women on the board by April 2023.

This requirement is not currently met.

At present, 3 of the Board’s 19 Directors are women (a further two nominated substitutes are women). Furthermore, GBSLEP does not currently monitor protected characteristics when undertaking Board Director recruitment.

Furthermore, the recently-published Civil Society Strategy suggests that Government expects LEPs to do more to engage and include wider community representatives in their structures and at their Boards.

As above, the Executive will develop a proposal to review Board composition in 2018/19, with a view to implementing throughout 2019/20.

LEPs will need to provide a secretariat independent of local government to support the Chair and board in decision-making.

Within the implementation plan, LEPs should outline their plan to put in place a secretariat independent of local government to support the Chair and board. The LEP should outline the timeframe in which they expect to have this secretariat in place.

This requirement is partially met.

While the Executive is hosted by Birmingham City Council, our BEIS Relationship Manager is satisfied that the Executive is sufficiently independent of the City Council to satisfy this requirement.

In addition, the Executive is developing its Future Operating Model with a view to being established as an independent, active company early in 2019/20.

Item 12 Appendix B


Accountability & performance

Government will support all LEPs to have a legal personality.

Within the implementation plan, LEPs must outline their plans to adopt a legal personality. LEPs that already have a legal personality are not required to make any changes. All LEPs should plan to adopt a legal personality by April 2019. Government will provide further advice to LEPs on incorporation.

NB: where changes to geographies have been agreed, LEPs and Government will agree an appropriate timeframe for incorporation.


GBSLEP is registered as an active company with Companies House, although it does not trade and submits nil accounts every year.

The company’s articles of association will need to be revised to take account of Board composition and company members, depending on geography; further, in moving to an active company, the articles will need to include provision for both executive and non-executive directorships.

LEPs will want to identify a single accountable body within each area that is responsible for all LEP funding.

Within the implementation plan, LEPs must outline their plans to adopt a single accountable body within each area that is responsible for all LEP funding. The LEP should outline the timeframes in which they expect to have this arrangement in place. The plan should also include details about the transition of any funding arrangements.

NB: LEPs should outline where programmes, such as EZs, will continue under existing accountable body arrangements.


Birmingham City Council is GBSLEP’s single accountable body.

As legal entities, all LEPs will be required to hold an AGM. We will set an expectation that these are open to the public and businesses to attend, and properly promoted.

Within the implementation plan, LEPs must commit to hold an AGM; open to the public to attend. LEPs should plan to hold their first AGM shortly after they become incorporated. In most cases, this will be at the beginning of the 2019-20 financial year.


Item 12 Appendix B


Accountability & performance

We will expect all LEPs to set out exactly who is accountable for spending decisions, appointments and overall governance locally.

Within the implementation plan, LEPs should outline their plans to review the responsibilities of the Chair, Board, Director and Accountable Body to discuss their plans to outline these responsibilities in a revised Local Assurance Framework.


However, GBSLEP’s currently arrangements would benefit from being simplified so that lines of accountability are clearer. The Executive proposes to do this through the governance review, which should now be restarted.

The Government will support LEPs to set out how they will ensure external scrutiny and expert oversight, including participating in relevant local authority scrutiny panel enquiries to ensure effective and appropriate democratic scrutiny of their investment decisions.

Within the implementation plan, LEPs should outline their plans to discuss and agree their scrutiny and oversight process with the LEP’s Accountable Body Section 151 Officer. LEPs and S151 Officers should refer to forthcoming guidance on the role of the S151 Officer.


GBSLEP has a Joint Scrutiny Committee and is developing a three-year work programme with the Committee.

Item 12 Appendix B


Mayoral Combined Authorities

Government will consolidate its engagement with MCAs and their LEPs with a collaborative approach to agreeing a LIS.

For LEPs in MCAs, LEPs and the relevant CA should discuss the distinct role of the LEP and their future working arrangements.

In the implementation plan, the LEP should outline their plans to review these arrangements and their plans to develop a published agreement of their roles and responsibilities. The LEP should provide an update on any discussions to date. This should be consolidated in their Local Assurance Framework by the end of March 2019.

This is partially met.

GBSLEP is working closely with the West Midlands Combined Authority to develop and deliver Local Industrial Strategy, and it is anticipated that roles and responsibilities will be delineated further through that process.

GBSLEP has worked closely with partners to consider the issue of coterminous boundaries with the West Midlands Combined Authority and a presentation will be given to the Board on 13 September for further discussion.

To help ensure that LEPs have a distinctive role from the MCAs, we will support LEPs and MCAs to develop and publish agreements – brought together in a single document with relevant financial assurance frameworks – which set out their respective roles and responsibilities in a way that recognises the variation between places, while providing sufficient clarity on accountability for public funding.

We will encourage LEPs and MCAs to move towards coterminous boundaries in line with the wider discussions on LEP geographies.

Item 13


BOARD MEETING

13 September 2018

FUTURE OPERATING MODEL Recommendations The Board is recommended to:

1. Note the requirement of Strengthened Local Enterprise Partnerships regarding independent secretariats;

2. Agree in principle the intention to “activate” GBSLEP as an independent, operating company limited by guarantee;

3. Note the outline costs (as included in the Medium-term Financial Plan) and;

4. Delegate authority to the Chair to oversee this work, and agree to receive further reports on the final proposed Future Operating Model and its implementation plan at future Board meetings.

Background

5. As set out in ‘Strengthened Local Enterprise Partnerships,’ Government requires that all LEPs are established as legal personalities with secretariats independent of local government.

6. GBSLEP is a legal personality – it already exists as an active company, is registered with Companies House (registration number 07635395) and returns “nil” accounts every year.

7. While Government regards GBSLEP as sufficiently independent of local government (because it has in place clear lines of accountability and a clear separation of powers between the Executive and the Accountable Body), the Executive has identified some challenges with operational performance including:

• Procurement and revenue expenditure

• Creating roles, filling vacancies and staff retention

• Executive staff are accountable to both Birmingham City Council and the GBSLEP Board, which creates conflicts in how both Executive and BCC staff manage relationships.

• Resource availability to support LEP activity through the Accountable Body

Item 13

8. Looking at models of good practice established elsewhere (including Cheshire & Warrington, Black Country, Coventry & Warwickshire, Liverpool City Region, Coast to Capital and New Anglia LEPs), greater operational independence can provide the LEP with the means to significantly improve performance in these areas.

9. In order to meet the Board's level of ambition and deliver our SEP, GBSLEP requires the right level and calibre of staff across all its worksteams, and needs to be agile and fleet of foot in taking up opportunities. Having considered how to achieve this by exploring good practice established at other LEPs, it is proposed that activating the company is the best solution.

Key issues 10. The Executive has been exploring the “activation” of the company and, in doing

so, establishing GBSLEP as an independent, operating company as a means of driving improved operational performance, as well as improved transparency and accountability. The Executive has begun shaping a model based on good practice established at other LEPs around the country.

11. A Future Operating Model project board has been established, chaired by Clive Heaphy and with Roger Mendonça as the project sponsor from the Executive (Katie Trout will assume this role going forward). The City Council’s finance, legal and HR departments are all represented. The City Council is supportive of the transfer in principle.

12. This work will be supported by a consultant, working with the Executive for three days a week. As part of this, independent legal and HR support are also being explored.

13. The headline costs associated with the implementation of the Future Operating Model are projected to be £370k to 31 March 2020 (please note: these costs represent a best estimate at the time of publication and are subject to change as the work programme is developed), and have been incorporated within the Medium-term Financial Plan.

14. Government has made £200,000 available in 2018/19 to implement the requirements of ‘Strengthened Local Enterprise Partnerships,’ and GBSLEP anticipates that at least the same sum will be available in 2019/20 (in addition to the £500,000 of Core Funding to which Government has already committed).

15. While operating costs are projected to increase, the Board is asked to note that Birmingham City Council currently provides “back office” functions (finance, legal, HR) as an in-kind contribution to the running of the LEP. It is likely that GBSLEP will have to begin paying for these services, regardless of whether it becomes an active, independent company.

16. The proposed outcomes of this work are:

• The ability to invest revenue in priority interventions more quickly and efficiently

• The ability to define our own risk appetite and to develop interventions on that basis

Item 13

• The ability to define job roles and pay and reward packages in line with market standards, thus attracting and retaining the calibre of staff necessary to deliver the LEP’s agenda

• Clearer lines of transparency and accountability between the Board, the Executive and its accountable body, meeting the ‘Strengthened Local Enterprise Partnerships’ requirements

17. The Board is also asked to note that while issues such as administrative boundaries and co-terminosity with the Combined Authority are not yet resolved at the time of publication, the timetable for implementation of those issues is April 2020. In the meantime, GBSLEP is committed to achieving the outcomes set out in its delivery plans and investing its funds as efficiently and effectively as possible in the local economy in order to drive growth. The Executive is clear that regardless of how the wider issues are decided, its business model needs to change in order to enable this. The development of the Future Operating Model will take account of these matters as they progress.

18. The timescales for the implementation of the Future Operating Model are currently being explored and further detail will be issued to the Board in due course. It is anticipated that the earliest the Model will be operational is from 1 April 2019. Formal approval to consult on staff transfer may be required from Birmingham City Council; should staff transfer be necessary, the Executive will consult with staff affected and the trades unions.

19. It is envisaged that the implementation of the Model will require changes to both the Assurance Framework and Articles of Association. The Executive will set out those changes and consult with Board Directors and Company Members on them.

Conclusion 20. This paper sets out the intention to establish GBSLEP as an operating,

independent company limited by guarantee along with the headline cost implications of doing so. The Board is asked to note the intentions set out in this paper, agree in principle to establish GBSLEP as an independent, operating company and delegate authority to Tim Pile to oversee the development of the Future Operating Model on behalf of the Board.

Prepared by: Nick Glover Executive Manager


07730 281 420

Date: 2 September 2018


GBSLEP Annual Conference 2018 Building local partnerships. Enabling business success. Delivering economic growth.

26th September, The REP, Birmingham, B1 2EP

OBJECTIVES

The 2018 Annual Conference presents a major opportunity for GBSLEP to update attendees about future developments and the priorities of the partnership. The core objectives are for the audience to;

i. See the achievements of the LEP over the last 12 months, and feel confident that the LEP has and will continue to deliver across the geography.

ii. Celebrate the exciting future of the region, understand the opportunities, and have confidence that there is a clear strategy in place to capitalise on current and future opportunities.

iii. Understand how they can contribute to developing ideas and projects that seek support and/or funding from GBSLEP.

KEY MESSAGES

i. GBSLEP delivers – we have already delivered real world tangible benefits across our geography, and can be trusted to deliver in the future

ii. Greater Birmingham & Solihull’s regional economy has thrived over the past year, and the area has cemented its position as the leading core city region for economic growth – and the LEP have made a number of significant interventions and these have contributed to that growth

iii. That we want all of our stakeholders, but particularly our key businesses, to help us identify barriers to/opportunities for growth and work with us to identify how we overcome those barriers/maximise opportunities

AGENDA

08.00 – 08.55: Registration, projects showcase and networking with breakfast (project stands: Enterprise Zone, Tyseley Energy Park, GBSLEP Growth Hub, The Prince’s Trust, Life Sciences Park, further TBC.)

08.55 – 10.30: Presentations and panel talks

10.30 – 11.30: Refreshments and networking, plus media interviews for speakers & Board Directors

CONFIRMED SPEAKERS

Tim Pile: Chair of GBSLEP

Chris Loughran: Deputy Chair, Delivery, GBSLEP

Andy Street: Mayor of the West Midlands

Anita Bhalla: Chair of Performances Birmingham plc

Carmen Watson: Managing Director, Pertemps, recently named IoD West Midlands Director of the Year

Matthew Rhodes: Chair, Energy Capital

Michael Mychajluk: Purchasing Manager, Jaguar Land Rover

Ken Garner: CEO of Dignio Ltd

Steve Knight: Creator and Executive Producer of Peaky Blinders

Katie Trout: Director of GBSLEP

RUNNING ORDER

Time Title Duration Speaker/s

08:00 – 08:55 Arrivals / networking with breakfast and projects showcase

55 minutes Stands:

Enterprise Zone

Tyseley Energy Park

The Prince’s Trust

Life Sciences Park

Ladder for GBS

Hoobrook Link Road

Growth Hub

08:55 – 09:05 Welcome & Achievements 10 minutes Tim Pile

09:05-09:15 GBSLEP Delivery 10 minutes Chris Loughran

09:15-09:30 Mayor of the West Midlands (Local Industrial Strategy)

15 minutes Mayor Andy Street

09:30 – 10:00 Future of High Growth Industries (panel discussion)

30 minutes

5 mins for intros

25 mins facilitated discussion, based on 4 questions

Chair: Anita Bhalla OBE

Panellists:

Michael Mychajluk, JLR (lead on supply chain programmes) - Advanced Manufacturing & Engineering

Carmen Watson, Pertemps (IoD Director of the Year) - Business Financial and Professional Services:

Matthew Rhodes, Energy Capital – Energy

Ken Garner, Dignio Ltd. (recently invested in

Birmingham) - Life Sciences

TBC – Creative Industries

10:00-10:15 Keynote speaker: Creative Industries

15 minutes Screenwriter and film director Steven Knight

10:15- 10:25 GBSLEP focus 10 minutes Katie Trout

10:25 – 10:30 Conference close 5 minutes Tim Pile

10:40 – 11:30 Media interviews 50 minutes GBSLEP Board Directors & Speakers only

EVENT WEBSITE ADDRESS www.gbslep-conference.co.uk

HOW TO REGISTER

The registration form is on the website. Please share the following the link to access the registration section directly is: https://gbslep-conference.co.uk/#section-register

ATTENDANCE

As of 28th August, there were 364 registrations to the Annual Conference. The venue capacity is 300, therefore registrations will be capped at approx. 400. The next 4 weeks will focus on targeted invitations only. Analysis of the current audience indicates an approximate split of 40% private sector, 60% public sector and education.

Of our high growth industries, Business, Financial and Professional Services is best represented, Life Sciences has good representation, however the remaining industries; Energy Technologies, Advanced Manufacturing and Creative Industries are not well represented – particularly the latter two.

SOCIAL MEDIA

Twitter:

When you tweet about the event please tag with the following:

@GBSLEP

#gbslepconf18

Examples of tweets:

• It’s great to see to many registered for the @GBSLEP Annual conference on 26 SEP, and an excellent line-up of speakers incl Steve Knight, Peaky Blinders Creator #creativesectorsuccess #gbslepconf18

• I’m excited to be attending/speaking/chairing a panel debate [**delete as appropriate**] @GBSLEP’s Annual Conference, 26th SEP. It’s a real opportunity to review the region’s successes. If you’re not attending, keep updated using #GBSLEPconf18

https://gbslep-conference.co.uk/#section-register

https://gbslep-conference.co.uk/#section-register

Please also participate in tweeting on the day through the event.

Linkedin:

The following posts have been drafted as examples for Board Directors:

• I’m excited to be attending/speaking/chairing a panel debate [**delete as appropriate**] at this year’s GBSLEP Annual Conference, 26th September. It’s a real opportunity to review the region’s successes and look at future opportunities for economic growth in Greater Birmingham. I look forward to seeing all of you who have registered there. If you’re not attending on the day, you can keep updated on the discussion using #GBSLEPconf18

• GBSLEP’s work directly benefits businesses across the Greater Birmingham & Solihull area, from mentoring programmes to skills development and investment into major transport and infrastructure projects. This year’s Annual Conference will start to highlight the ways in which our businesses can become even more involved in helping us to identify opportunities for growth and work with us to maximise those opportunities. Start the conversation with #GBSLEPconf18.

• The Greater Birmingham & Solihull area is an entrepreneurial hotspot, with over 12,000 new companies registering in Birmingham alone last year. Our GBSLEP Growth Hub is focused on helping these companies grow, providing diagnostics for more than 600 businesses over the last year. The Growth Hub, and many more of GBSLEP’s projects will be showcased at our Annual Conference. I look forward to seeing those who are attending there on the 26th September #GBSLEPconf18

• The Greater Birmingham & Solihull area is gaining momentum - recording real success in attracting overseas investment, creating private sector jobs and growing the regional economy. I’m excited to hear more about the region’s successes and look at future opportunities for economic growth at GBSLEP’s Annual Conference. Join in the conversation #GBSLEPconf18

Please direct any queries to: Katie Fulcher, Executive Officer for Key Sectors, [email protected]


SPEAKER BIOGRAPHIES

Tim Pile, Chair of Greater Birmingham and Solihull Local Enterprise Partnership, holds a number of non-executive responsibilities, following on from his executive career in retail, banking, professional services and marketing.

In addition to his role as Chair of GBSLEP, Tim is a Non-Executive Director of Marshalls Plc and Deputy Chairman of The Royal Orthopaedic Hospital. He also serves on the Board (and is a past president) of the Greater Birmingham Chambers of Commerce and is on the CBSO development Board.

Chris Loughran is a Partner with Deloitte, the leading international professional services firm. Until February 2015 he was Senior Partner of the firm’s Midlands practice, a role which he took up in 2010. In the ten years prior he led the development of Deloitte’s Technology Consulting business, as well as advising organisations in both the public and private sector on their use of technology to promote and deliver business change. He served on the Consulting business Executive Management team and was made a Vice Chairman of the firm in 2010. Chris was elected to the Board of Partners as representative of the Midlands Region and served from 2010 to 2016.

He joined the Board of Marketing Birmingham in 2011 and that of the West Midlands Growth Company on its formation in 2017. In addition to his role on the Board of the West Midlands Growth Company, he is Deputy Chairman of the Greater Birmingham & Solihull Local Enterprise Partnership, Chairman of the CBSO Development Trust, a Trustee of the Roman Catholic Archdiocese of Birmingham and Chairman of Birmingham & Solihull Rugby Club.

Chris is currently High Sheriff of the West Midlands 2018-19.

Before becoming Mayor, Andy Street combined a career at John Lewis, Britain’s most successful workers’ co-operative, with a host of high-profile economic development roles, working with local and national government.

He was also chair of the Greater Birmingham & Solihull Local Enterprise Partnership (GBSLEP) between 2011 and 2016, helping to build the relationships that have underpinned the economic growth of the region.

Anita Bhalla is currently Chair of Chair of Performances Birmingham plc, Chair of the Creative City Partnership, Governor of the RSC, Member of the Council of Warwick University, Non-ex Director of Birmingham Women’s and Children’s NHS Trust and Chancellor of Birmingham Children’s University. Chair of the WM Mayor’s Leadership Commission. Anita’s media career has been extensive of which over 25 years with the BBC; from setting up the BBC Asian Network to a news Correspondent, Documentary maker to being Head of Political and Community Affairs in England then Head and Editor of the BBC’s Public Space Broadcasting and President of Circom (a European wide group of public service broadcasters).

Anita has won several awards including the CRE’s Race in the Media National Television News Award and the Windrush Broadcaster of the Year. In 2009 she was awarded an OBE for her services to Broadcasting and Communities. In 2012 Anita was the High Sheriff for the West Midlands. Anita has been awarded Honorary Degrees from Wolverhampton University, Birmingham City University and Warwick University. She is also a fellow of the Royal Society of Arts.

Michael Mychajluk, BA FCA, Supply Chain Projects and External Engagement Manager, Production Purchasing, Jaguar Land Rover. Mike has worked at Jaguar Land Rover for 20 years and currently leads complex supply chain projects for improved cost efficiency and competitiveness within the Production Purchasing Function. Mike also supports External Engagement for Jaguar Land Rover’s supply chain stakeholders.

Mike’s work brings together a variety of UK stakeholders from the banking sector, finance professions, Government support agencies and departments, industry associations, universities as well as leaders in the automotive companies themselves to enable the UK supply chain to compete successfully. Mike is an active member of the business and skills ecosystem that will seek to achieve a strong and sustainable future for the UK automotive industry against a challenging political and economic background. Mike provides direction and advice to all levels of the supply chain with the desire and ability to succeed in advanced manufacturing.

Carmen Watson is one of the UK’s most successful business women, as Chair of Pertemps, a £295 million turnover business.

She has been at the helm of the UK’s largest independently held recruitment company for thirteen years. During her time with Pertemps she has steered the company through challenging business climates, implemented a strategy which has helped drive growth and position Pertemps as a market leader in its field, servicing a broad cross section of industry verticals and public sector bodies. Carmen believes passionately that the UK’s service based economy must be supported by a strong underbelly of good talent management practices with Diversity & Inclusion at the fore.

Carmen also sits on the Board of RfO, is a Fellow of the Institute of Recruitment & Employment Confederation and on the Board of a newly formed organisation, Real Deal, an organisation which promotes services for the Health Sector

Ken Garner is the CEO of Dignio Ltd. the UK subsidiary of Norway based Telehealth solutions provider Dignio A/S.

Ken has extensive experience of international sales, marketing and business development; he has held senior roles with Intel (LANDesk division) Microsoft (SCCM division) Accent Software International and Xerox (Text to Speech division). He has worked as an I.P. commercialization consultant for several European government departments, Universities and venture capital funds and is active on a number of international standards bodies.

Ken is skilled in Board level negotiation, Business Planning, Operations Management, Coaching and Governance Regulation and Compliance issues. He is a highly motivated, articulate and committed life sciences and healthcare services professional.

Matthew Rhodes is a Board Director of the Greater Birmingham & Solihull Local Enterprise Partnership and Chair of Energy Capital in the West Midlands. He’s worked in the energy industry for over 20 years, initially with international companies including RWE and BP. Prior to this he worked in manufacturing and management consultancy. From 2003 to 2017 he founded and ran an independent engineering and building physics consultancy specialising in low carbon innovation, developing and delivering collaborative projects at the leading edge of the energy system transition.

Matthew has an MA in Engineering, Economics and Management from the University of Oxford. He’s a fellow of the Institution of Engineering and Technology, Trustee of the National Energy Foundation and an Honorary Research Fellow in Energy Policy at Exeter University. Matthew received the Sir Thomas Atwood Award from the City of Birmingham University in 2011 for his collaborative work to address fuel poverty in the city.

Katie Trout is responsible for setting the strategic direction of the GBSLEP and the delivery of its ambitions, working directly to the LEP Board. She leads the LEP Executive and oversees the day to day operations of the LEP.

Katie has played an integral role in GBSLEP since it was formed in 2010. Prior to this she held a number of posts in Birmingham City Council including Executive Assistant to the Chief Executive and Cabinet Support Officer.

Katie led on the development of the LEP’s City Deal and £430m Growth Deal with Government, and is now tasked with overseeing their delivery. She also played a key role in the development of the West Midlands Combined Authority, and the negotiation of the first Devolution Deal.

Katie has recently returned to work after maternity leave. Her interests now revolve around looking after her one year old son - enjoying Greater Birmingham's food and cultural scene has been replaced by soft play and picnicking in the park!

Steve Knight is the creator and Executive Producer/writer on BAFTA-winning Peaky Blinders, starring Cillian Murphy, Helen McCrory and Paul Anderson. Season 5 will start shooting later this year. He’s also the Executive Producer/creator/writer on BBC series Taboo, which starred Tom Hardy.

He has had four novels published, a series of screenplays, and has directed three films (all of which he also wrote). His directorial debut, Hummingbird, starred Jason Statham and Agata Buzek. Locke, with Tom Hardy, about an ordinary whose life changes in the course of one evening and which won him a 2013 BIFA for Best Screenplay. And Serenity, starring Matthew McConaughey and Anne Hathaway, which will be released later this year.

In November 2016, he received the highest honour from the Royal Television Society’s Midlands Centre – the Baird Medal – in recognition of his career.

Item 15

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GREATER BIRMINGHAM & SOLIHULL LEP BOARD MEETING

13 September 2018

GBSLEP FINANCE REPORT Revised 2018/19 Budget, MTFP and Month 4 Income & Expenditure

Recommendations 1. The LEP Board is recommended to:

1.1. Note the revised 2018/19 budgeted income (£5.9m) and expenditure (£4.7m) and the forecast March 2019 carry-forward position for income funds/reserves (£4.5m), taking account of the LEP Review recommendations;

1.2. Approve the revised operating budget for 2018/19;

1.3. Note the projected Medium-Term Financial Plan (MTFP) income and expenditure, which takes account of the LEP Review recommendations;

1.4. Note the 2018/19 month 4 year-to-date actual expenditure (£0.7m) position, and the comparison to Budget for the period (£0.8m), and

1.5. Approve the proposed streamlined approval process for the SEP Enabling Fund (Business Rates Pool).

Background 2. This paper sets out a revised operating expenditure budget for 2018/19 for the GBSLEP,

following publication of the Ministerial review of LEPs (the LEP Review) report, Strengthening Local Enterprise Partnerships, on 24 July.

3. As set out in the Future Operating Model (FOM) paper, the Executive is keen to proceed with becoming an active limited company as soon as is practical. This will give the LEP greater operational independence and can provide the LEP with the means to significantly improve performance. As GBSLEP is currently hosted by Birmingham City Council, a company would need to be activated, and LEP staff, funding and activities transferred to that company. The LEP Review supports LEPs becoming independent legal entities.

4. Additional one-off and ongoing costs have been incorporated in the revised budget, for resources to design, implement and operate such a Future Operating Model.

5. The revised budget also includes updated income estimates for the year and a revised year-end outturn position for 2018/19.

6. The revised overall Budget position is that the LEP is planning to:

• deliver £1.8m of intervention projects in 2018/19, which is more than double the previous year (no change from previous budget submission)

• support the delivery of almost £40m of capital projects (no change from previous budget submission)

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• obtain revenue funding in excess of planned revenue expenditure, thus increasing the healthy level of reserves to £4.5m by the year end (£1.3m more than previous budget submission)

7. The LEP Executive has completed a Medium-Term Financial Plan (MTFP) showing the income and resources to be expended to achieve the Delivery Plans over the budget year and the following three years (2018-2022), now that the outcome of the LEP Review is known. This includes the assumption that the Board approves the proposal to implement the Future Operating Model, and the LEP will run all activities from a separate company limited by guarantee.

8. The overall MTFP position is that the LEP is planning to:

• deliver at least £1.8m of intervention projects each year over the MTFP period, with plans to increase this significantly once increased Business Rates Pool income has been confirmed

• support the delivery of almost £80m of LGF capital projects over the remaining three years of the programme

• obtain sufficient revenue funding to meet planned revenue expenditure each year, thus maintaining a healthy level of reserves every year

9. This paper also sets out a proposed new streamlined approval process for calls on the retained element of the Business Rates Pool (BRP) income, to enable more rapid activation and delivery of intervention projects funded by the Business Rates Pool.

Key issues

Revised Budget 2018/19 10. The summary revised operational expenditure budget for 2018/19 is as follows:

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11. The actual outturn for 2017/18 of £2.2m has been adjusted for comparison purposes, to reflect a full year of PMO staff who started at different times during 2017/18.

12. The year-on-year increase of £2.1m (£1.5m in previous budget submission) in this year’s budget is primarily due to:

• a planned increase of £1.1m in the delivery/intervention/ programme costs needed to achieve the approved Delivery Plan outcomes,

• as well as £0.3m additional costs to design and implement the Future Operating Model by April 2019,

• and the provision of a £0.3m contingency for potential additional costs that may need to be incurred as a result of the LEP Review/FOM,

• the balance is made up of additional resources to support the delivery of the increased interventions, and one-off costs.

13. Current planned service delivery interventions and the amounts included in the 2018/19 budget totalling £1.8m, some of which have previously been approved, are shown in the attached Appendix.

14. The forecast income for the year and the predicted carry-forward/reserves position at the 2019 year-end is as follows:

INCOME FUNDING STREAMIn-hand

funds April 2018

2018/19 Budget Income

2018/19 Budget Spend

In-hand funds

March 2019£m £m £m £m

Core Funding (incl Growth Hub & LGF PM Fee) 0.4 2.3 (2.1) 0.5

Business Rates Pool 2.9 3.3 (2.0) 4.3

Growing Places Fund (income & expenditure TBA) 0.0 0.1 (0.0) 0.1

LEP Review funding 0.0 0.2 (0.6) (0.4)

TOTAL 3.4 5.9 (4.7) 4.5

15. While the table above shows the LEP is likely to have £4m unspent BRP income at the end of the year, £3.3m will only have been confirmed at the end of 2018 and paid in January 2019. In addition, given the volativity of BRP income, it is considered prudent to retain a reserve of BRP income for further revenue projects, in case income from the fund is reduced or removed in future years.

16. A further £500k of Core Fund was made available to GBSLEP for 2018/19, as the first year of a two-year deal. In addition, a further £512k Growth Hub funding has been agreed for this year. Government has confirmed that further such funding will be made available in 2019/20.

17. BCC agreed in June that in principle the LEP can capitalise its PMO related costs against the LGF programme funds. The budget therefore includes an estimate of a PMO

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capitalisation charge for 2018/19 totalling £1,200k (£800k estimate in previous budget submission), which will be drawn down through the PMO capitalisation charge.

18. The latest forecast for the Business Rates Pool received on 2 July from BCC Finance is an income to the LEP of £3.166m for 2017/18 which is due to be received by the LEP in January 2019 (plus a further “side” contribution from Wyre Forest District Council of £0.108m). This is an unaudited position and therefore subject to change. This amount has now been included in the revised budget above (£1.3m more than included in the previous budget submission). We are told that this increase is due to the low number of appeals lodged during 2017/18, plus changes in business rates reliefs.

19. If this higher amount is received by the LEP, additional intervention activity can be undertaken – the LEP Executive is looking into what initiatives could be brought forward and /or scaled up in the Delivery Plans, and proposals will be brought forward to a later LEP Board meeting.

20. The Growth Hub will be funding £0.2m of the planned service delivery interventions, leaving £1.6m to be funded from the Business Rates Pool. An additional £0.3m of Employment & Skills activity costs are planned to be funded from the BRP, as well as the agreed annual amount of £0.2m to fund Programme delivery costs. The total call on the BRP in 2018/19 is therefore £2.1m.

21. The Executive is keen to push forward further proposals to invest the retained element of the Business Rates Pool; however, given the relatively uncertain funding environment for LEPs it is proposed that a significant portion of the Business Rates Pool is retained to invest in the implementation of the Delivery Plans in future years, and to use as local match to lever in revenue made available by Government.

22. In addition, it is also important to retain a degree of flexibility with the Pool to enable significant but unplanned calls to be considered and taken forward.

23. The income and expenditure forecast for the capital programmes monitored and managed by the LEP are summarised as follows:

CAPITAL - BALANCE SHEET £m

Total Fund Available

Unspent/In-hand funds

April 2018

2018/19 Forecast Income

Drawdown

2018/19 Forecast

Spend

Unspent/In-hand funds March 2019

Local Growth Fund 1, 2, 3 186.0 - Annual allocation 0.0 19.3 (19.3) 0.0 - RIF funded 36.7 0.0 (18.6) 18.2

Sub-total 186.0 36.7 19.3 (37.9) 18.2

Growing Places Fund 22.5 10.0 0.1 (0.1) 10.0

TOTALS 208.5 46.7 19.4 (38.0) 28.2

24. LGF funding has been allocated to 56 projects, and £38m is planned to be spent in 2018/19.

25. The LEP also has responsibility for the Enterprise Zone and has recently taken over the management of the programme, although no specific resource or funding is included in the current LEP budget at this stage. In addition, a number of ESIF-funded projects, revenue and capital, will be delivered this year, although costs and funding are not included within the LEP budget.

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26. The LEP engaged with the FDs of the partner councils on the contents of the budget at their last meeting in July.

27. The Board is asked to note the revised 2018/19 budgeted income and expenditure and the forecast March 2019 carry-forward position for income funds/reserves, taking account of the LEP Review recommendations.

28. The Board is asked to approve the revised operating budget for 2018/19.

Medium-Term Financial Plan 29. The LEP Executive has completed a Medium-Term Financial Plan (MTFP) showing the

income and resources to be expended to achieve the Delivery Plans over the budget year and the following three years (2018-2022). This includes the proposal to create a Future Operating Model for the LEP, and the LEP running all activities from a separate company limited by guarantee.

30. The assumptions made in preparing this MTFP are of course subject to change, especially for later years. Any revisions needed to these assumptions will be made in consultation with the Board, and updated financial plans will be re-presented for approval.

31. The summary operational expenditure for the four years of the MTFP period is as follows:

32. The key assumptions made in developing the MTFP expenditure projections include:

• The remit and geography of the LEP remains the same as currently

• The LEP becomes an independent limited company with all operations transferred on 1 April 2019

• Much of the PR/Comms/marketing activity is brought in-house

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• All roles filled by interims in 2018/19 are replaced by permanent staff in 19/20

• Additional operational staff are employed from 2019/20 to operate the company and to provide most corporate support services, with other support services being commissioned externally

• If requested by local authorities, the LEP starts providing technical specialists to councils from 2019/20 as a new service to fill gaps in their capacity

33. The projected income for the MTFP period is as follows:

MTFP INCOME STREAMS £mIn hand

April 2018 2018/19 2019/20 2020/21 2021/22

Government Funding 0.4 0.5 0.5 0.5 0.5

Growth Hub 0.0 0.6 0.5 0.5 0.5

LGF PM Fee 0.0 1.2 0.7 0.7 1.0

Core Funding Sub Total 0.4 2.3 1.7 1.7 2.0

Business Rates Pool 3.0 3.3 3.7 3.7 3.7

Growing Places Fund 0.0 0.1 0.1 0.1 0.1

LEP Review funding 0.0 0.2 0.3 0.0 0.0

TOTAL 3.4 5.9 5.8 5.5 5.8

34. The key assumptions made in developing the MTFP income projections include:

• The remit and geography of the LEP remains the same as currently

• The LEP becomes an independent limited company with all operations transferred on 1 April 2019

• Government funding for LEP operations and the Growth Hub continues at current levels throughout the period

• An equivalent capital funding scheme to the LGF is introduced in 2021/22, and the LEP continues to receive a PMO fee from this funding

• The latest forecasts of the LEPs share of Business Rates Pool income provided by Council FDs are realised, and continue at the same level into 2021/22

• The LEP continues to manage the Growing Places Fund throughout the period

• The LEP applies for and secures funding from government for implementing the LEP Review recommendations

35. If the income and expenditure projections above are delivered over the MTFP period, there will be a positive increase in the net funding position each year, with almost £6m held at the end of 2021/22. The Executive are looking to identify additional initiatives that this funding can be invested in over the MTFP period, to deliver further relevant outcomes for the LEP area.

36. The income and expenditure projections for the capital programmes to be monitored and managed by the LEP over the MTFP period are summarised as follows:

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MTFP CAPITAL SPEND £m2018/19 Forecast

2019/20 Projection

2020/21 Projection

2021/22 Projection

CAPITALLocal Growth Fund 1, 2, 3 - Annual allocation 20 13 32 TBA - RIF funded 18 5 -8 TBA

Sub-total 38 18 24 TBAGrowing Places Fund 0 TBA TBA TBAUK Shared Prosperity Fund (LGF + ESIF) 0 TBA TBA TBATOTAL 38 18 24 TBA

37. The MTFP demonstrates (all things being equal) that the organisation is on a stable financial footing and able to deliver its priority objectives in the medium term. It essentially provides a “reference case” against which the Executive will develop its budget each year. In considering the MTFP, the Board is asked to note that it is built upon some assumptions and that the risks and opportunities around those assumptions will need to be carefully managed by the Executive moving forward. To that end, a strategic financial risk register is provided in the Appendix.

38. The Board is asked to note the projected Medium-Term Financial Plan (MTFP) income and expenditure, and capital programme projections, which take account of the LEP Review recommendations.

Month 4 Year-To-Date Spend v Budget 2018/19 39. The summary actual operational expenditure for the first four months (April-July 2018)

against the profiled budget for this period is as follows:

2018/19 ACTUAL EXPENDITURE £000FULL YEAR

BUDGETMTH 4 YTD

BUDGETMTH 4 YTD

ACTUALOverspend

/ (Saving)

FIXED COSTS

Staff Costs – internal 1,140 327 319 -8

Interim Staff Costs – external 276 132 124 -8

Consultancy Costs 333 95 58 -37

PR/Comms/Marketing - external 170 80 66 -14

Subscriptions 96 54 32 -22

Overheads 354 55 46 -9

2,368 743 645 -98

VARIABLE COSTS

Delivery/Intervention/programme Costs 1,760 100 50 -50

LEP Review/Future Operating Model Costs 304 0 0 0

Corporate Contingency re LEP Review/FOM 267 0 0 0

2,331 100 50 -50

TOTAL EXPENDITURE 4,699 843 695 -148

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40. It can be seen that operational spend to date is behind target at the end of the first four months. Some permanent and interim appointments have not happened as quickly as planned, and invoices for consultancy work and subscriptions have not arrived as expected. Delivery/intervention activity has increased, with a committed revenue intervention pipeline of £420k in place; however, challenges have been encountered with internal governance and approvals processes; the Executive is working with City Council officers to expedite a solution, which should be in place heading into quarter 3.

41. Furthermore, in keeping with the Future Focus paper received by the Board in March, the Executive is keen to invite more partners and stakeholders to submit proposals for revenue funding and expects this activity to increase going into quarter 3.

42. Please note that BCC accounts for the LEP on a ‘cash basis’, so some work has been done and invoiced, but will not appear in the accounts until it is actually paid.

43. LGF capital programme expenditure in the first four months totals £4m. The spend is planned to increase in future months as new projects are approved, with most of the planned £38m occurring in the fourth quarter as in previous years.

44. The Board is asked to note the 2018/19 first four months actual spend.

Business Rates Pool spend approval process 45. A proportion of the retained element of the Business Rates Pool was paid to GBSLEP in

January 2017 of £2.4m. For the purposes of distinguishing the element allocated to the LEP from the wider Pool, this has been branded the “SEP Enabling Fund,” and has been invested in a range of activity during 2017/18 to support the LEP’s agenda, as agreed by the Board on 24 August 2017.

46. A further £1.4m was received from the Pool in January 2018 which will support additional intervention projects during 2018/19. The Pool income is only invested in those projects that are approved through the agreed SEP Enabling Fund process.

47. The intervention projects included in the budget for 2018/19 stand at £1.8m (see Appendix), which is a substantial increase on the previous year, which totalled £0.7m. With increased BRP funding now expected in January 2019 of £3.3m, this will enable some existing projects to be brought forward and/or scaled up, as well as additional projects to be funded.

48. A more streamlined approval process is now needed to ensure that this substantially increased funding can be used to deliver outcomes in a reasonable timeframe.

49. It is therefore proposed that the existing process is streamlined as follows:

• The approval of the revised 2018/19 budget will automatically approve the list of BRP funded projects totalling £1.8m (see Appendix)

• BRP funded projects will only need to obtain separate LEP Board approval if they are new projects over £100k each, that are not included in this approved project list, or if they are existing listed projects, that require more funding in excess of £100k

• New projects under £100k that meet the current qualifications for BRP funding, will be approved by the Head of Strategy under delegated authority

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• Existing listed projects that require additional funding up to a total funding value of £100k will be approved by the Head of Strategy under delegated authority

50. The Executive will ensure that this aligns with the City Council’s revised internal governance, and that spend is reported to the Board at each meeting.

51. The Board is asked to approve the proposed streamlined approval process for Business Rates Pool funded projects.

Conclusion 52. The above sets out proposals to staff the Executive and deliver key activities in support

of the Delivery Plans in 2018/19, and the following three years of the Medium-Term Financial Plan period.

53. These plans take account of the requirement for the LEP to become an independent

corporate entity, resulting from the LEP Review. There are further findings and recommendations in the LEP Review report which are being investigated and developed by the LEP Executive, which in time may require further revisions to the MTFP.

54. The LEP Board is asked to note and discuss the positions set out above, and if satisfied, approve the revised expenditure budget for 2018/19, and approve the new approval process for Business Rates Pool funded projects.

Prepared by: Keith Mitchell, Finance & Transformation Consultant Contact: [email protected] Date: 5 September 2018


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APPENDIX 1 MTFP Strategic Financial Risks Risk Likelihood Impact Mitigating actions Residual

risk 1 Business Rates Pool income fails to

materialise Retain a portion of BRP as contingency and for spend in future years

2 PMO Capitalisation Charge is undeliverable

PMO charging has been agreed by the Board and is being implemented by the Accountable Body

3 Government commits no further Core Funding

Retain a portion of BRP as contingency for spend in future years and implement PMO charging to reduce reliance on Government funding; consider commercialisation of core LEP activity as part of the FOM

4 Limited funding to deliver strategic pipeline priorities

Executive commissioning a Strategic Funding Advisor to develop a funding strategy, looking at wider sources of funding

5 Procedural constraints prevent efficient allocation of funding

GBSLEP and BCC governance is being revised to ensure funding can be issued swiftly once GBSLEP has approved funding

6 Limited Executive capacity to develop interventions

The Executive will continue to develop and commission interventions, and will seek to promote funding opportunities more widely

7 Limited capacity at key partners to develop and propose interventions

Executive commissioning a Strategic Funding Advisor to develop a funding strategy and support partners

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2 2018/19 planned service interventions and spend budgets Service Intervention Budget £ NotesScrutiny Work Programme projects 16,666 £50k over 3 years

HUB Development Fund projects 17,500

SEP Enabling Fund - Ringfenced projects previously approved: - cultural economy toolkit 50,000 - employment & skills resource; grants to local ESBs 80,000 - innovation enabler 50,000 - towns & local centres framework 500,000 - strategic employment sites study 50,000 - westside vision 30,000 - Channel 4 study 25,000 - Life sciences inclusive growth 50,000 - ESF Tech Assistance proposal - match 33,333 £100k over 3 years

SEP Enabling Fund - NEW proposed Delivery Plan projects (INDICATIVE - not yet approved):AME 1: Leadership programme (GHDF) 40,000 GHDF/HUB Dev FundAME 3: SME Framework 50,000 AME4: Supplier Framework 10,000 AME5: Skills Pilot 40,000 AME: Lead generation contribution to WMGC commission 100,000 £50k 17/18 and £50k 18/19BPFS 1: Lab Pilot 15,000BPFS 2: Cluster support 10,000Creative 2: creative industries pathway (brokerage) (GHDF) 25,000 GHDF/HUB Dev FundCreative 2: creative industries pathway ( cluster training) 30,000Creative 3: cross sector collaboration (IP test beds) 25,000Creative 4: Creative industries promotion 30,000Creative skills 60,000Life Sciences 2a): scale up support (GHDF) 17,000 GHDF/HUB Dev FundLife Sciences 2b): cluster support 30,000Energy 1: opportunities mapping 20,000Energy 2a): EIZ support 7,000Energy 3: Low Carbon Network 10,000Business support 2: Angel Investment Hub advisor (GHDF) 15,000 GHDF/HUB Dev FundBusiness support 3: A2F portal update for alternative finance (GHDF) 5,000 GHDF/HUB Dev FundBusiness support 6: inclusive growth workshops & support (GHDF) 40,000 GHDF/HUB Dev FundBusiness support 6: Black Listings UK (GHDF) 20,000 GHDF/HUB Dev Fund - under contractBusiness support: Silicon Canal (GHDF) 38,000 GHDF/HUB Dev Fund - under contractDigital: Digital Skills 50,000Channel 4 Stage 2 Study 50,000West Midlands Innovation Commission grant 15,000

TLC Ecosystem Study 75,000 Place Delivery Plan interventionLand Acquisition Loan Fund Feasibility Study 10,000Place-Making Network Development 20,000 continuing spend each year over MTFP

1,759,499

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GREATER BIRMINGHAM AND SOLIHULL LEP BOARD MEETING

13 September 2018

The Impact of Health and Wellbeing on Economic Growth

Recommendations Board Directors are asked to:

1. Note the update on Health and Wellbeing in the West Midlands.

Background

2. There is significant evidence that health and wellbeing impacts on economic growth. DWP cite mental health and muscula-skeletal disease as two of the largest causes of loss of productivity and people from the workforce. The West Midlands Mental Health Commission calculated that 4.1 million working days are lost to mental health problems and 70,000 people are economically inactive, costing the West Midlands £2.2 billion per year.

Key Issues

3. Overall Health and Wellbeing outcomes in the West Midlands are worse than the England average.1 When you compare outcomes for West Midlands LAs against those LAs which are our nearest comparators (CIPFA nearest neighbour groupings) there are still a significant number of indicators where the West Midlands has worse outcomes than its comparators, with Birmingham and Wolverhampton having comparatively high numbers of indicators that are worse than their respective nearest neighbour grouping averages. However, even areas such as Warwickshire, Solihull and Staffordshire, which are normally considered to have good health outcomes in a West Midlands context, don’t compare favourably with their respective CIPFA nearest neighbours.2

4. Air quality is one area where the WM has a high number of indicators that are worse than our comparators. Given the impact of poor air quality on the young and elderly failing to address this issue has significant economic costs however, tackling this major contributor to ill health has economic costs in itself.

5. Inequalities then the picture that emerges for the West Midlands is as follows: Looking in more detail at three sets of outcomes where there is strong evidence of their link to economic growth and socio-economic

1 Public Health Outcome Framework 2018 2 LKIS West Midlands 2018

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Life Expectancy and Healthy Life Expectancy (LE and HLE) 6. LE and HLE are core indicators in the WMCA SEP. Both LE and HLE expectancy are

below the England average and in the WMCA area the gap has been widening from the England average. The latest figures suggest that the historic trend of increasing LE has stalled in the majority of West Midlands LAs and in a number of LA areas has decreased (male LE Dudley and Walsall, female LE Wolverhampton) with only Shropshire and Worcestershire seeing an increase in LE.3

7. HLE figures are important as they represent the age at which an average person will have significant health problems that will increase their dependence on public services and reduce their ability to take part in day to day activities including work. Poor HLE has major implications for delivering economic growth and improved productivity. In the West Midlands average HLE is below the England average (63.3. yrs. (M) and 63.9 yrs. (F)) at 62.6 yrs. (M) and 63.2 yrs. (F) and this is much worse within the WMCA area at 59.7 yrs. (M) and 60.3 yrs. (F) but in both cases is significantly below the state pension age. On average, women across the West Midlands can expect to live 24% (19.5 years) of their lives in poor health whilst men can expect to live 21% (16.2 years) of their lives in poor health (West Midlands Public Health Intelligence Group 2018).

8. Overall the gap between LE and HLE (called the window of need) is similar to the England average across the wider WM but is worse for the WMCA (due to poorer HLE).

Figure 1 Window of Need - WMPHIG report on HLE in the WMCA

3 Public Health Outcome Framework 2018

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9. In addition there is a significant gap in the LE and HLE between the most and least affluent groups. Nationally the inequalities gap is just below 20 years for HLE and about 9 years for LE. This means that HLE for people in our most deprived areas is around 50 yrs of age.

Children and Young People 10. A range of reports, most famously the Marmot Report on Health Inequalities, have

highlighted the impact of poor Child and Young People (CYP) outcomes on subsequent socio-economic outcomes. In the West Midlands we have some of the worse CYP outcomes in England. For example our infant mortality outcomes are significantly worse than any other region in the country. The three worse LAs for infant mortality in the Country are within the WM and only one area (Shropshire) has infant mortality outcomes below the national average (Child and Maternal Health 2018).

11. As with the data on life expectancy there is a strong correlation between a number of CYP outcomes and socio-economic status. The percentage of children living in poverty in the WM is increasing with children in low income families now accounting for 25% of children in the WMCA area and 20% of children across the wider WM.

12. The impact of this can be seen in the rising levels of obesity in CYP which leads to poorer outcomes across health, educational achievement and adult socio-economic indicators. In the West Midlands levels of child obesity are significantly above the England average at both age 4-5 (reception) and 10-11 (year 6). However, the level of obesity is nearly double (1.8 times) higher for children in the most deprived groups compared to the least deprived group in reception class and this rises to double the levels (1.96 times) by year 6 of education. This equates to a quarter of all children in the most deprived group being obese at year 6. CYP who are obese at this age are likely to become obese adults and are more likely to be absent from work due to sickness with obesity calculated to cost around £27bn to the wider economy across England.

13. Another important indicator is School Readiness - good child development at the end of reception is again strongly related to levels of child poverty.

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14. In the West Midlands only 68.6% of children are school ready which falls to 66% in the WMCA against an England average of nearly 71%. School Readiness falls to around 56% for children from lower income families although children in our urban deprived areas do better than those living in more affluent areas (England 56%, WMCA 55.9% and WM 55.7%). The evidence shows that children with poor development at this age will struggle to catch up and are likely to have poorer socio-economic outcomes as an adult. This aligns with recent data that shows poor social mobility, especially for younger age groups, within the West Midlands and significantly higher levels of NEETs in the WMCA area to paint a picture of a significant loss of human capital and capability required to drive future economic growth.4

Individual and Community Wellbeing

15. The importance of wellbeing to the economic success of the country is an area of increasing interest as the evidence for a relationship between wellbeing and a number of socio-economic measures increases. HMT have recently updated the Green Book (which is used to evaluate the return on investment in government policies/projects/programmes) to explicitly include wellbeing as a core component of any evaluation.

16. Poorer individual wellbeing is linked to poorer health, poorer socio-economic inequalities (over 50% with the poorest wellbeing will be unemployed, long term sick or inactive compared to less than 20% of those with highest wellbeing) and wider inequalities (less than 50% of those with the lowest wellbeing will have A level or higher qualification compared with over 70% of those with the highest wellbeing). Although levels of poor individual wellbeing are similar to the England average there

4 Public Health Outcome Framework 2018, Child Health Profile 2018

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is variation across different areas in the West Midlands and if we look at a measure of community wellbeing – social inclusion - we can show that better social inclusion scores are linked to higher levels of prosperity in the different LEPs in the WMCA.

The role of the WMCA in delivering improved health and wellbeing that improves economic outcomes Inclusive Growth Unit

17. The main route for addressing the links between health and wellbeing and economic growth is via the inclusive growth unit. The key aspects of this that link health and wellbeing to economic growth are:

a) The development of a population intelligence hub in collaboration with PHE (national and WM centre) to provide the population insight needed to develop effective actions to improve the human capital available to drive economic growth.

b) The inclusion of health in the industrial strategy both from the perspective of the importance of life and health sciences and the NHS to the economy of the West Midlands but also recognising that good health and wellbeing across the whole of our communities is an essential requirement for good economic growth. In addition one of the government’s four challenges is on healthy aging and here we are using the opportunity that the WM has as the only region of the country were the ration of the over 65s to the under 65s will not increase in the next decade to focus on how the WM could improve HLE by focussing on working age health.

c) Improving individual and community wellbeing via the work on social inclusion, homelessness and housing, improving physical activity and addressing multiple complex needs.

Workplace health

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18. A major focus of Thrive WM is on improving the mental and physical health of the working age people by both keeping people in work healthy and getting people with health issues back into work. Current work includes:

a) IPS pilot that is involving primary care in identifying people who need supporting back into work. This pilot is being funded via the DWP work and health unit.

b) Incentivising businesses to develop workplace health programmes this is a pilot involving a 150 SME businesses that is seeking to demonstrate that financial incentives would encourage SMEs to develop workplace health programmes and that the return on investment on this would improve both health outcomes and economic outcomes. This pilot is funded by the DWP work and health unit.

c) A workplace health toolkit for the West Midlands that provides resources to support businesses in developing effective workplace health programmes.

d) WM is piloting a campaign and digital tool to improve people’s understanding of mental health issues and part of this is to work with businesses, universities and NHS work places to improve the mental health awareness of their staff.

West Midlands prevention programme

19. The consequence of poor HLE is felt not only in the loss of people from the work place and reduced productivity but also in the increased demand across public services but particularly in health and social care. Therefore the WMCA is working with PH and NHS partners to develop prevention initiatives that are aimed at keeping people healthy. There are three current strands to this work:

a) Developing regional approaches to prevention. Currently the WMCA is working with NHSE, PHE and the six NHS Sustainability and Transformation Partnerships across the wider WM to undertake a stocktake of current and future prevention intentions. The aim will be to identify prevention activities that are occurring across all the STPS and then to use a workshop to identify the opportunities for collective action across the STPs to improve the pace and scale of change on prevention across the WM. Secondly the WMCA with LA PH colleagues are working on embedding health in transport and housing major infrastructure developments.

b) Children and young people summit. As highlighted by the subset of CYP outcomes discussed earlier improving CYP health and wellbeing outcomes could have a transformational impact on the WM. However, the issues behind the poor outcomes we see in the WM are complex and the actions required to address them will require strong commitment and partnerships across the private, public and voluntary sector to deliver them. We are therefore working with the Health Foundation and Nuffield Trust (who are both developing programmes on CYP) and the Birmingham Children’s and Women’s Trust (The CEO is heading but the group looking at CYP for the new NHS 10 year plan) to deliver a CYP that will bring together national and local expertise to identify what is the one or two actions the WM should focus on across all stakeholders to improve CYP outcomes.

c) Digital solutions to keeping people healthy. Currently we have a pilot that is working with a Black Country Housing Association to pilot the use of a digital social intervention tool to improve both health and social outcomes for

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elderly people. In addition we are exploring with both private and public sector partners the potential for digital tools to keep people healthy and how this could be linked to the developing capability within the NHS for people to have access and use of their health data.

Conclusion

20 Board Directors are asked to consider the report and comment, as felt appropriate.

Report by: Henry Kippin

Director of Public Service Reform

Contact: [email protected] 07903 627000

Date Created: 03/09/2018