The West Midlands should join forces with the East Midlands to form one giant economic region in a bid to stop the wealth gap with London growing even larger, a new study suggests.
Advantage West Midlands, the £300m government quango set up to boost the local economy, should merge with its East Midlands counterpart to create a giant regeneration body, according to a leading think tank.
The Centre for Cities warned that radical changes were needed because the economy in the rest of the country was continuing to fall even further behind that of the capital. But West Midlands Minister Ian Austin (Lab Dudley North) said: “Now is not the time to make complicated and expensive changes.”
Regional Development Agencies such as Advantage West Midlands have been at the heart of the Government’s economic policy for the regions of England since they were created in 1999. Between them they spend or distribute about £2.2 billion each year, including £300 million in the West Midlands.
One goal was to close the north-south divide - with the Midlands part of the north - and help the rest of the country catch up with the wealthy south east.
But the West Midlands still lags well behind London, and the gap has grown even wider according to some measurements. This is the official definition used by the Government.
According to the Centre for Cities, Gross Value Added - the official measure of output - grew by 17.6 per cent in London and the south east between 1999 and 2006, compared to only 15.1 per cent in the rest of England.
This means that the north-south divide has grown even wider during the first seven years that Regional Development Agencies have been operating, according to the think tank.
Economic output in London and the south east ran at £22,657 per head in 2006 – £6,000 more than in the rest of England.
The study suggests that the East and West Midlands would be more successful as a single development agency. This would bring cities such as Coventry and Leicester, which have strong links, into the same organisation instead of being separated as they are now.
It also suggests that development agencies in the south could be scrapped, as they are not needed.
And it urged the Government to forget about its aim of closing the gap between different regions - arguing that development agencies would be more successful if allowed to focus on creating jobs and boosting the local economy.
Dermot Finch, Director of the Centre for Cities, said: “There is great uncertainty about the future of Regional Development Agencies. The Government says they are all crucial but the Tories say they are terrible. The truth is somewhere in between: Regional Development Agencies are needed more up north, less in the greater south east.”