The rapid changes that have taken place to the West Midlands economy since the 1970s, based on the collapse of a once-proud manufacturing heritage, have long been something of an inconvenient truth for governments to explain away.
How, you might ask, can a country that no longer makes very much to sell abroad, and is not self-reliant, manage to prosper in a post-manufacturing era?
Can a seemingly unstoppable rise in shopping malls and DIY warehouses, built ironically on the sites of former factories, and huge growth in the professional services sector, really stoke the engines of one of the world’s major economies?
To this conundrum we can now add something that, at a superficial glance, may have appeared to bolster many a city and region since 1997 – the inexorable rise of public sector employment. It is, perhaps, inevitable for a society where government is increasingly big and increasingly interested in telling us what we can and cannot do that a great many people will be required to run the many councils, quangos and government agencies that now exist.
Just how many people now rely on the public sector for employment has become clear in a study today by the Centre for Cities thinktank, which shows that 31.2 per cent of Birmingham’s workforce is employed in public administration, education and health, compared to 11 per cent in manufacturing.
Net job creation since 1998 has been almost entirely confined to the public sector, although Birmingham’s slight saving grace is that other towns and cities in the UK rely to an even great extent on government, local government and health sector jobs for their livelihood.
Although the Centre for Studies report does not delve too deeply into the inequities of such an imbalance, it is worth pointing out that the rise of the public sector means almost one-third of Birmingham’s workforce is now rewarded with gold-plated final salary pension schemes, while the other two-thirds can only gaze on with, one suspects, increasing envy and fury.
It is inevitable, though, that a public spending squeeze after the General Election will have a serious impact in Birmingham. The city council is already starting to shed jobs on a regular basis, resorting to compulsory redundancies for the first time in decades, and no one can yet be certain about the exact harshness of the medicine required to restore the country’s post-credit-crunch finances to stability other than to say that the future reckoning will not be pleasant.
The real message contained in the Centre for Cities study is that, if Birmingham and the city region is not careful, an over-reliance on public sector jobs will make it extremely difficult to create growth as the recession comes to an end.
It may be a case of stating the blindingly obvious, but if opportunities to boost knowledge-intensive employment – creative and digital industries, high value manufacturing, financial and professional services – are not seized now, the city and regional economies will be in even more trouble in five years’ time than they are now.
Who can say with any certainty whether the £15 billion West Midlands economic output gap compared with the average for England might not hit £25billion or even higher if action is not taken?
Depressingly, the report makes familiar reading in several respects. What planning has taken place in Birmingham to address the governance changes that a Conservative election victory would produce? What’s the business plan for the demise of the regional development agency and the possibility of an elected mayor? The answer is that no plan exists because the politicians running Birmingham don’t want to talk about or face these issues.
The study also gets to the heart of the somewhat uneasy relationship between the city council and Birmingham universities. If you want to promote the knowledge economy, universities are an obvious starting point, but far more must be done to bring together town and gown in a meaningful alliance.
And last, but not least, no serious study of the local economy would be complete without a warning about the shambolic way Birmingham attempts to market itself. As the report states, the mixed messages or no messages at all is becoming something of an embarrassment and is now a “real constraint” on attracting new inward investment.
Birmingham City Council commissioned this report, which does not make comfortable reading. Let this be one document that does not end up on the top of a very dusty shelf.