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East Midlands Devolution - the burning issue...

East Midlands Devolution - the burning issue...

East Midlands devolution was again the hotly-debated topic by this year’s Love Business ‘Question Time’ panel.

A year on from 2022’s fiery discussion, when the prospect of extra funding, decision-making powers and a metro mayor for the region was mooted, there was still uncertainty around whether a deal involving Derbyshire, Nottinghamshire and Leicestershire could be thrashed out.

Prominent business leaders from across the region formed a panel at the recent Love Business Expo to discuss the burning economic issues of the day, with Chris Hobson, Director of Policy at East Midlands Chamber, facilitating the debate. The group comprised Chamber Chief Executive Scott Knowles, RSM’s Kevin Harris, Sandra Wiggins from manufacturer DPI, Lewis Stringer from the British Business Bank, and Lisa Gilligan from national law firm Freeths.

The big issue for debate was the intricacies surrounding the current devolution deal on the table for Derby, Derbyshire, Nottingham and Nottinghamshire (known as the 4Cs deal because it involves the two cities and two counties) and what it might mean for the wider region.

Scott Knowles said: “One of the things we’ve been campaigning on as a Chamber for many years is the lack of parity regarding investment from central government into the East Midlands compared to other regions. Investment is always welcome, so from our perspective  devolution, in principle, is positive.

“However, there’s still a long way to go to get the right deal, and it will be challenging. There are lots of local, regional and national interventions that could change in the short to medium term, and these will need to be navigated.

“There’s also got to be the political will because these are political structures we’re talking about.

“So, it’s not just about campaigning for what we might get from any deal. It’s also about business having meaningful conversations, particularly with politicians who might have very entrenched views.

“Devolution is not about any initial funding coming into the area – it’s about longer-term investment, what might be available, and starting conversations with central government at the right level.

“There is lots of economic evidence available that devolved areas receive a much greater level of investment over time than non-devolved areas.

“I have some sympathy with the view of Leicester – they already have a Metropolitan Mayor and a level of investment that goes with it. So, when it comes to any potential deal involving Leicester, the city can’t be worse off just because it comes together with the rest of the region. You also can’t relegate businesses in Leicestershire to the back seat.

"Bringing everyone together is the crux of the issue. There’s a stalemate, so conversations must continue at all levels because the numbers need to make sense for this to move forward.”

How the proposed ‘4Cs’ deal will affect businesses in other parts of the region was a cause for concern. 

Sandra Wiggins said: “I do have concerns around the devolution deal and Leicester and Leicestershire not being part of it. I don’t profess to be an economist or understand all the intricacies behind it or the big numbers thrown out.

“To me, it’s a real frustration that it’s being pushed as this amazing East Midlands deal with Derbyshire and Nottinghamshire, but no Leicester and Leicestershire. We are part of the East Midlands, and I think that would put us at a disadvantage.”

However, there was also a belief among panel members that provided the political will is there, a deal involving all three cities and three counties could be struck.

Kevin Harris said: “It’s not dead. The key thing for us to recognise is that if we go ahead and succeed with a three-city, three-county deal, we’d potentially create the largest economic area in the UK. We’ve seen what’s happened in the West Midlands with proper representation and what they’ve got as a result.  

“If we get our act together, we could have an area larger in size and economic scale. So, collectively, we need to ponder what that might mean for all of us in this region.”

In good shape

While the devolution agenda was a central part of the discussion, there was also much talk of how the region is faring in the current economic climate and the support available to businesses.

Sandra Wiggins said: “We’re not the same business as we were three years ago, or even a year ago. We must consistently keep moving forward. We can’t wait for Government to help us or tell us what to do. We have to be out there and change our models of business.

“It’s not so much about confidence in business. It’s more that we don’t have a choice – we can’t sit around and wait for things to happen. We’ve got to find a way.

“That’s one of the great things about the East Midlands. Whatever challenges are out there, we’ll always find a way to get through them.”

Access to finance

The funding landscape has changed since Brexit regarding finance for businesses to grow. Lewis Stringer was keen to stress that support is still there.

He said: “Over the past two or three years, we’ve quite rightly had to support a massive number of small businesses.

“It’s led to a situation where many businesses have been exposed to external finance for the first time. Pre-COVID business owners, rightly or wrongly, were reticent about taking external finance to invest in their businesses and grow. Our region was no different from anywhere else in that respect. 

“So, there’s been an education piece for many businesses. Consequently, many now carry debt and have suffered through other things, including the fallout from Brexit, supply chain issues, or the cost of living. I could go on. And the industry itself has changed over that period. Investment is still declining in this region because those small businesses have been through a lot in the past three years, and that uncertainty’s still there. Why would you invest in that environment?   

“As an organisation, it’s about working with our partners to get the message out that financial support is still there. There are organisations like the Chamber and RSM supporting businesses. Alternative lenders are coming in.

“There’s been a real structural change in the banking industry over the past two or three years, and we’re not sure when it will go back. However, the key message is that support is there if you want to invest and grow.

“We have found that many innovative, go-ahead businesses have continued to invest using the finance available to them and take the opportunities.”

Scott Knowles added: “I don’t think anybody’s sitting back and waiting to be given permission to grow their businesses, but we know there are some real challenges in being able to do that.

“Where do businesses find the experienced, highly-skilled individuals they need to grow?

“And then having the right management resource for whatever your objectives are is very problematic.

“People and skills have always been an issue. If you look at the results of our Quarterly Economic Surveys from 10 years ago, they say the same thing about skills as it does now. But it feels more acute post-pandemic and post-Brexit.”

Equipping the local labour market with the skills employers need is only part of the issue. Ensuring they want to live and work in the East Midlands also plays a role.

Lisa Gilligan said: “I was born in Derby. I grew up in Derbyshire. I went to university law school in Nottingham. I moved away to London, and now I live and work in Leicestershire and have done for 20 years.

"We need more talented graduates to stay. We need the East Midlands to be an attractive place to live as well as to work.”

Don’t mention the ‘R’ word

While the mainstream media is constantly bombarding us with a narrative about a cost of living crisis and impending recession, the general feeling was that while the current economic climate is harsh and there are challenges, there’s still room for optimism.

Kevin Harris said: “Most of the businesses I’m seeing and talking to day-to-day are in pretty good shape and very positive about what the future may hold. I accept that this may be skewed somewhat given the type of clients RSM UK tends to act for, but even if I replace that hat with my Chamber one I do hear many good stories of local businesses trading well and finding opportunities to grow and develop.

“There is a need to be conscious of talking ourselves into recession. While the UK economy might well technically go into recession at some point, that does not mean that all parts of the country and industry sectors are equally affected, and hence what is confirmed nationally may not reflect what we ourselves are experiencing locally across the East Midlands region.

“This region has always been incredibly resilient due mainly to the predominance of a high proportion of SMEs and less reliance on large employers or sectors than many others in the UK, so we’ve often come through crises in much better shape than other areas have.”

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