A £1 billion development agency which could face the axe at the next election has been praised for creating jobs and wealth in the West Midlands.
Advantage West Midlands adds £4 to the region’s economy for every £1 it spends, an inquiry by consultants PricewaterhouseCoopers has concluded.
The findings will provide the agency with a welcome boost as it faces the prospect of fighting for its survival under a Conservative government.
Regional development agencies were created by Labour as a way of taking decision-making away from Whitehall. As regional bodies, they are supposed to be in a position to work closely with local businesses. But they were also originally designed as the first stage of new regional governments, which were fiercely opposed by Conservatives.
Caroline Spelman (Con Meriden), the shadow local government secretary, has published plans to let councils abolish the agencies and create their own, smaller organisations to promote economic development. Regional development agencies face convincing councillors that they are worth keeping, if the Tories win a general election.
PricewaterhouseCoopers was commissioned by the Department for Business to provide an independent assessment of regional development agencies, and whether they provide good value for money.
AWM spent £987?million between 2002 and 2007 on projects ranging from support for the automotive industry to attracting high technology businesses into the region and subsidising training. This work had added to the regional economy’s gross value added figure – the official measure of productivity, which has replaced GDP – by £4.2?billion, the inquiry found.
The consultants also examined the likely benefits to the economy in future years, and estimated that the region would eventually benefit by £7.3?billion from projects Advantage West Midlands had already carried out.
Advantage West Midland’s work leading the Rover Task Force, which was set up to limit the damage to the economy caused by the closure of Rover’s Longbridge factory in 2005, won particular praise as “a major success”.
The report said Advantage West Midlands had created or “safeguarded” nearly 78,000 jobs and helped create 3,000 new businesses. Nick Paul, chairman of Advantage West Midlands, said: “We are a business-like and business-led organisation, and our knowledge of business has enabled us to lead the economic development of the region, bringing together public and private sectors effectively to deliver the strong results reported today.”
He highlighted the work of the new West Midlands Taskforce, which was created to help the region during the recession and is modelled on the Rover Taskforce. “While much of our current focus must be on responding to the economic downturn, working through the West Midlands Taskforce, we also have to maintain a strategic overview of the region’s future, leading on the longer-term regional developments such as our £100?million investment in Birmingham New Street – the largest single regional development agency investment ever.”
Ian Austin (Lab Dudley North), Regional Minister for the West Midlands, said: “I am convinced the West Midlands needs a regional business-led investment body now more than ever – not just to support families, help businesses and save jobs during the downturn but to build a stronger economy long-term.”
Conservative MP Andrew Mitchell (Con Sutton Coldfield), a member of David Cameron’s shadow cabinet, said: “There are some very good people at Advantage West Midlands and I’m glad their work is recognised. We believe the structure is not as good as it could be.”