On Thursday 29 October, 150 business leaders gathered for a Financing Recovery conference hosted by Aston Business School, organised in conjunction with Business Voice West Midlands, Birmingham Business School and the Fair Finance Consortium.
The conference heard from the Rt Hon Jack Straw MP, Secretary of State for Justice, and Lord Chancellor, who argued that at the beginning of the recession the government’s top priority was to ensure that the banking system did not collapse, calling it the circulation system of our economy. He spoke about the need to ensure that there was a sufficient stimulus package and the role of quantitative easing of the monetary supply. In his speech Mr Straw challenged opposition claims that the government had failed to ‘fix the roof while the sun was shining’, pointing to investments in schools and modernisation of the existing social housing stock. He also defended the government’s record on debt, arguing that the UK debt level is at or below the level of our major competitors. He identified three major actions that the government are committed to: continuing to support the economy until the recession is over; rebuilding fiscal strength, including legislation to halve the deficit by 2014; and planning for growth.
Mr Straw acknowledged that the West Midlands had been particularly badly affected by the recession, mainly because of the large manufacturing base in the region.
As well as hearing from political representatives the audience also heard presentations from a wide range of business leaders, experts and stakeholders, with an opportunity to question them as part of four panel sessions.
Rob Dobson, Senior Economist at Markit then gave an overview of the economic situation in the West Midlands using PMI data (Purchasing Managers Index). Rob illustrated that the recession began with an unprecedented decline, followed by an unprecedented rebound.
Rob used the PMI data to illustrate how the West Midlands region has been hit much harder than nationally, and globally. This is because over 50% of the West Midlands economy is made up of real estate, manufacturing, wholesale and retail (including the automotive industry). The West Midlands has also seen a higher unemployment rate with the number of job losses disproportionately higher than in other regions.
Brendan Connor, Board Member at Advantage West Midlands outlined how the local Regional Development Agency (RDA) co-ordinates the public and private sector in supporting the West Midlands economy. Brendan argued that the role of the RDA is likely to become more rather than less important following a general election.
Comparing the data to the last two recessions Brendan was surprised that the impact hasn’t been greater, which he believes highlights the resilience of West Midlands companies. He believes that companies have introduced methods like short time working and reduced wages to help them survive.
Brendan argued that the RDA remains an antidote to the disproportionate effects of the recession, and that funding schemes should continue to help support manufacturing in the region.
Brendan concluded by saying that the global downturn provides an opportunity for new business, particularly in the low carbon economy, and that he believes that a significant piece of the jigsaw of the low carbon economy can be found in the West Midlands.
He was followed by Peter Ibbetson of Royal Bank of Scotland who outlined how RBS has changed in the last 12 months to help SMEs. He explained how RBS introduced guaranteed overdrafts and committed pricing to help restore confidence. RBS also looked at the skill set of the people in the front line, most of whom had not been through a recession before. As a result RBS created a dedicated group of experienced banking professionals who they could deploy to help SMEs. RBS also made available £3 billion of new money for SMEs, divided into regional funds.
Peter commented that when businesses are in trouble banks tend to be the last to find out. He suggested that the earlier a bank can find out that a business is struggling, the easier it is to provide help and support, and this is why RBS now provide an advice service.
Dr Ben Clegg, Aston Business School introduced the EREBUS project, a government funded initiative delivered by Aston, Birmingham and Warwick Business Schools. EREBUS is a way of obtaining both financial and intellectual capital, and is aimed at providing solutions to business challenging problems, and research capacity building.
David Caro from Qualpast gave a small business perspective on the current climate. He reported that the Federation of Small Businesses asked the government to introduce short time working assistance as many companies can’t afford to pay staff, but at the same time can’t afford to pay redundancy.
David highlighted that when surveyed business leaders said that they would rather see an increase in trade rather than an increase in funding. He reported that 47.8% of businesses reported a fall in trade between June and August 2009. He concluded that SMEs must share good ideas to show other SME leaders that they are not alone.
Paul Corcut of UKTI gave an overview of what other countries have been doing and gave advice on how West Midlands companies can enter the supply chain in developments in other countries as a result of their fiscal stimulus. Paul estimated that around 20% of EU project spending could be available to non home country companies.
Paul reported that the low pound makes UK companies competitive. He highlighted a number of websites where information can be found on the tenders available in different countries.
Norman Price, Chair of the Regional Finance Forum focused on market failure and finance gaps. He believed that government intervention is needed otherwise finance gaps would be larger.
Paul Kalinauckas explained how the Fair Finance Consortium was meeting the needs of local businesses.
David Hardman, Managing Director of Birmingham Science Park Aston gave an uplifiting presentation about developing the Big City Plan’s knowledge economy. He argued that the West Midlands had not been very good at telling its story. He gave an example of the emergence of the creative industries in the West Midlands which is larger than the construction, manufacturing and automotive sectors combined. He argued that the Big City Plan is not just about buildings but about creating interfaces.
Dr Pam Waddell, Director of Birmingham Science City built on the previous presentation by suggesting that Birmingham is a city with a strong research base and a number of businesses in a position.
Andy Youngman, Area Director for Lloyds TSB Commercial, gave the final presentation of this session explaining how Lloyds TSB are determined to be more accessible to customers, developing people and teaching them about business, not just finance.
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