Shropshire Star

The Midlands Engine – is it grinding to a halt?

Earlier this year, with much fanfare, a grand strategy was unveiled for the Midlands Engine. What is that, you ask?

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Engineering a brighter future – Chancellor Philip Hammond promotes the strategy with students

The idea is to bring together business and local authorities across the region, with Government support, to use its huge potential to ‘make the Midlands an engine for economic growth for the whole country’. That will involve funding for transport schemes and skills projects in addition to the hundreds of millions already being pumped into the East and West Midlands.

It is also seen as a response to former Chancellor George Osborne’s much-vaunted Northern Powerhouse. It was first announced in 2014. The Midlands Engine came about a year later and there has always been the concern it was an afterthought. The saga of the investment funds intended to help companies in the north and Midlands has not helped soothe those concerns.

Last year a string of events were held to promote the £400 million Northern Powerhouse Investment Fund and the £250m Midlands Engine Investment Fund. These involved practical financial aid for businesses, based on joint agreement between the British Business Bank – the state-owned development bank – and Local Enterprise Partnerships (LEPs) to provide a range of funding to support growth. A range of loans and investment programmes would give thousands of companies the money they needed to expand, buy new machinery, train their staff and take on new recruits.

Both funds were due to launch in February and March this year. In April the Northern Powerhouse Investment Fund was able to announce £240,000 being invested in four small and medium-sized companies, allowing a Sheffield company to expand its product range, a Manchester security firm to invest in a new range of equipment, a Leeds fire protection firm got £40,000 to expand and a varnish and insulation manufacturer given backing to look for new markets.

Three months later, following inquiries from the Star, it was confirmed the Midlands Engine Investment Fund, intended to help 780,000 companies, was instead still bogged down in issues around the procurement process – the sorting out of who got the valuable contracts to help distribute the money to the various applicant companies.

Maria Machancoses, programme director at the Midlands Engine, said: “There has been an unfortunate delay in the launch of the Midlands Engine Investment Fund due to some issues identified by the British Business Bank (BBB) in the procurement process for awarding contracts for the Equity and Proof-of-Concept funds.

“BBB is confident these funds will now be launched in the autumn, with 60 per cent of the total fund made up of debt and small business funds to be open for investment in early August.”

August is nearly up and, despite reassuring noises from the Midlands Engine’s PR people that an announcement is due ‘within the next week’, all remains quiet.

While there is considerable, and widespread, support for the aims and ambitions of the Midlands Engine, the delays in the funding have led to disquiet.

Johnathan Dudley, managing partner at accountants Crowe Clark Whitehill in the Midlands, said: “I have been holding on to projects with people on the strength of these Midlands Engines funds being promised. These delays are disappointing and alarming, particularly when the equivalent funds for the Northern Powerhouse are already being distributed. For whatever reason, the Midlands Engine is not getting off to anything like the same start as the Northern Powerhouse.”

Meanwhile on Sunday applications closed for the role of chief executive of the Midlands Engine, a job that comes with a ‘competitive salary’. Another task facing whoever gets the job is the fairly miserable public profile of the organisation.

Recent research by business funder Bibby Financial Services found while 43 per cent of the bosses at small and medium sized businesses (SMEs) had never heard of the Northern Powerhouse, a staggering 66 per cent had never heard of the Midlands Engine. In the assessment of Edward Winterton, UK chief executive of Bibby Financial Services, both strategies ‘are currently on unsteady ground’.

“It is vital that SMEs in these regions see tangible benefits from the billions of pounds that have been earmarked, but this must start with awareness of the opportunities available to them and an understanding of how they can benefit.”

Gill Hamer, director of the Marches Local Enterprise Partnership

Gill Hamer, director of the Marches Local Enterprise Partnership (LEP), said the organisation had taken part in two successful Midlands Engine trade missions to the US resulting in an agreement which will boost the cyber sector and supply chains in the region.

She says the LEP was also part of the Midlands Engine exhibition at the world's biggest market for investors, MIPIM in France.

"This put our businesses and the opportunities here in the Marches very much on the global map," she adds.

"We're also fully supportive of Midlands Connect, which is how the Midlands Engine is working to improve road and rail transport across the region - highlighting the transport challenges the Midlands faces to Highways England and Government.

"So business are certainly seeing the benefits of what the evolving Midlands Engine is doing on their behalf, even if they are not overly familiar with its name as yet.

"Business awareness will increase once the Midlands Engine Investment Fund is launched and we have worked closely with the British Business Bank on how MEIF can benefit our SMEs. We're hoping to announce what MEIF can do for our businesses very soon."

However, Paul Forrest, director of the West Midlands Economic Forum, is clear where the blame for the shortcomings lies: Whitehall. “The Midlands Engine strategy was written in Whitehall, and it exposes the voids in Whitehall’s knowledge of the Midlands,” he said. “We need to be more articulate in saying what the region needs.”

At the same time, the Government is relying on data that tells it that investments in London produce greater results that those in the Midlands. Mr Forrest says that is just plain wrong and downplays the power of the Midlands economy: “It’s the size of Austria, we produce four per cent of the global output of the aerospace industry.”

Investment in East-West transport links such as the A38 and the A41 would help open that up, but the key is for those in the Midlands to talk more to each other and present a combined front to London and Whitehall.

The alternative could mean serious engine trouble. Instead of the purring Jag we aspire to be, the region could end up as more of a Reliant Robin.

Recent research by business funder Bibby Financial Services found while 43 per cent of the bosses at small and medium sized businesses (SMEs) had never heard of the Northern Powerhouse, a staggering 66 per cent had never heard of the Midlands Engine. In the assessment of Edward Winterton, UK chief executive of Bibby Financial Services, both strategies ‘are currently on unsteady ground’.

“It is vital that SMEs in these regions see tangible benefits from the billions of pounds that have been earmarked, but this must start with awareness of the opportunities available to them and an understanding of how they can benefit.”