West Midlands

Region

Introduction

The West Midlands region is located at the hub of major road and rail networks. It is comprised of the large conurbation referred to as Birmingham, which includes the metropolitan districts of Wolverhampton, Dudley, Solihull, Sandwell and Walsall. This area is surrounded by the more rural counties of Warwickshire, Staffordshire, Herefordshire, and Shropshire, plus the metropolitan district of Coventry. The region has more than 5.8 million inhabitants and covers an area of about 13,000 sq. km. (about 5,000 sq. mi) (Eurostat, 2019).

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Economy

Socio-economic profile:

Half a century ago, the West Midlands was one of the most prosperous in the country, experiencing rapid growth in population, output and employment. However, economic restructuring, market liberalisation and increasing globalisation have all impacted significantly upon the region’s economy. Today, the West Midlands underperforms relative to national and international competitors, although in recent year the region has shown a steady economic recovery. Between 2010 and 2015 the GDP has steadily increased overall and so has done the GDP per capita (PPS) in comparison to EU average, moving from 86 to 88 (EU average set equal to 100) within the period 2010-2016 (Eurostat, 2019). However, in 2016 the GDP of the region started to steadily declined reaching of € 171b in 2017 (7.3% of the UK total) (Eurostat, 2019). This equated to a GDP per inhabitant of €26,100 in 2017 (PPS), which was lower than the UK national average (€31,700). The regional unemployment showed a considerable decreasing trend as of 2013, when the unemployment rate amounted to 9.1% (Eurostat, 2019). In 2018, it reached 4.9%, remaining above the national average of 4.0% and below the EU one (6.9%) (Eurostat, 2019). The West Midlands was the birthplace of the industrial revolution and has a long history in manufacturing. Services also play a large role in the regional economy employing almost half of the working population and providing over half the region’s GVA. Other region’s priority business sectors are represented by engineering, transportation and storage, construction and energy.

The Science & Innovation Audit for the West Midlands has identified five key technology themes for the region: advanced materials, sustainable construction, energy storage and systems, medical technology & healthcare, and transport technologies. While a significant proportion of economic activity is centred on the Birmingham conurbation, the region has a number of other fairly large economic centres such as the city of Coventry and the North Staffordshire district.

Research, Development & Innovation

RTDI profile:

The West Midlands has a rather strong and extensive research base in its universities, private institutions, commercial R&D and engineering facilities. The Gross Expenditure on Research and Development (GERD) as a share of GDP in 2016 was 1.96%, which was above the UK average of 1.68% (Eurostat, 2019). It GERD amounted to €3,394m and represented 8.39% of the total national GERD (Eurostat, 2019). In 2018, the region also had slightly fewer people employed in science and technology jobs (expressed as percentage of active population) than the UK average (32.9% against 36.4%, Eurostat 2019). In same year, there were 2,752,000 employed people in high-tech sectors, while tertiary education attainment in the West Midlands in the population aged 30-34 was 39.3%, below the national average of 48.8%, and in line with the EU average of 40.7%. The region is home to several universities including two research intensive institutions with strengths in science and technology fields: the Universities of Warwick and Birmingham, which were ranked 10 and 14 respectively in the UK in the 2019-2020 Times Higher Education World university rankings (79 and 116 respectively in the worldwide rankings).

These universities are the focus of significant regional funds for the development of research infrastructure under the ‘Birmingham Science City’ initiative. According to the 2014 Research Excellence Framework (REF), Birmingham University and Warwick University ranked in the top 5 nationally by research power and/or relative quality of research conducted across our Higher Education Institutions in a number of Units of Assessments, such as Aeronautical, Mechanical, Chemical & Manufacturing Engineering, Agriculture, Veterinary and Food Science, Computer Science and Informatics and Mathematical Sciences. The region is also home to ten science/innovation parks (e.g. Innovation Birmingham Campus focused on the digital and technology sectors, Birmingham Research Park on biomedical, and Stoneleigh Park on science-based rural industries) along with 14 incubators providing flexible property and value-added business support services to new start-up firms, often operating as part of the science parks.

Regional Innovation Scoreboard results

Latest Regional Innovation Scoreboard results:

According to the Regional Innovation Scoreboard 2019, West Midlands is ranked as a strong + innovator and innovation performance has increased significantly over time. The score has increased by almost 22.5% with respect to 2011. The region performed particularly well relatively to both EU and national average in R&D expenditures (121% and 111%, respectively); whereas, the public sector instead performed below the national and EU average (78% and 66%, respectively).

Governance

Governance profile:

In the UK, innovation policy is largely defined at national level. The Department for Business, Energy & Industrial Strategy (BEIS) is the government department responsible for designing innovation policies, along with a number of UK Government policy areas such as business and industrial strategy, science, energy and climate change. The Department, in particular, is in charge of ensuring cutting-edge research, science and innovation within the UK.

Innovation policies are delivered by Innovate UK, the country’s innovation agency, sponsored by BEIS. It is responsible for finding and driving science and technology innovations, thereby supporting UK businesses to move towards the industries of the future.

Innovate UK delivers a range of national programmes that support innovation across the UK with an annual budget in excess of £500 million (€560 million) by running, for instance, funding competitions open for projects led by a UK-based company in order to help develop innovative products, processes and services. In April 2018 Innovate UK became part of the newly formed UK Research & Innovation (UKRI), together with the seven Research Councils and a new organisation, Research England.

In order to strengthen its presence and impact at regional and local level, in 2016 Innovate UK appointed a team of ten Regional Managers to cover the UK. The Regional Managers act as Innovate UK’s local representatives in the area, working to further develop and extend its relationships with key local partners, in particular raising awareness and understanding of Innovate UK and providing a direct channel of communication with each region.

Major local partners for the implementation of regional innovation measures and strategies are either the Devolved Administrations in Northern Ireland, Scotland and Wales, Local Authorities (city councils, metropolitan boroughs etc. at NUTS 3 level), Combined Authorities (CA), which are legal bodies set up by legislation that enables a group of two or more councils to collaborate, and take collective decisions across council boundaries (key parts of government’s devolution agenda), or the Local Enterprise Partnerships (LEPs).

LEPs are business-led private-public partnerships and typically span a number of Local Authorities but not an entire (NUTS 1) region. The LEPs were created in 2010/11 and, in terms of geographical coverage, they are sub-regional, with a total of 38 LEPs currently operating in UK. While the concept of LEP was identified at national level, their design, composition and organisational structure is entirely ‘bottom-up’. The LEPs are led by local authorities and businesses across ‘natural economic areas’ and are focused on driving sustainable private sector growth and job creation in their area. Although there is no explicit requirement from a national level to focus on innovation, they share responsibility to deliver part of the EU Structural and Investment Funds for 2014-2020 targeted to innovation at the local level. There are at least three LEPs involving Local Authorities in the West Midlands NUTS 1 region.

Through financing from the Regional Growth Fund programmes, they also operate their own support measures. An overarching structure, the LEP network, provides information that enables all members to come together to discuss issues of shared importance, engage with the UK Government, and share knowledge and good practice. LEPs and Innovate UK’s Regional managers work together to align their respective strategies for innovation and to understand and highlight the innovation strengths of the region.

Before the establishment of LEPs, the English Regional Development Agencies (RDAs) were responsible for regional innovation policies in the nine UK regions (NUTS 1). Regional innovation policy in the UK began when the Regional Development Agencies (RDAs) were established in 1998 under the Labour government. Innovation increasingly became an important feature of their activities over a number of years, with a wide range of different policies implemented across the UK. Although specific regional policy responses varied, they tended to include:

support for knowledge transfer and collaboration between the research base and industry;
support for clusters and science innovation parks; investment in R&D infrastructure and centres of excellence.

Regions were also tasked with delivering a number of national innovation programmes at the regional level. In 2006/07, the range of programmes and services for business support (including innovation) underwent a process of simplification. As a result, most business-focused innovation support was defined by national policy and delivered locally by the RDAs. RDAs were closed in March 2012, marking thus the shift from structured regional policies based on NUTS 1 regions to a more local and varied approach to growth and development. No single body, in fact, is responsible any longer for regional innovation policy implementation in the nine NUTS 1 level regions in England.

Since the abolition of the RDAs in 2012, many innovation support mechanisms and their funding have been delivered at the national level via Innovate UK.

In addition to the LEPs and Local Authorities, there are several other organisations relevant to the Governance of regional innovation. These include the universities of Birmingham, Coventry, Warwick, Wolverhampton, Birmingham Science City and several city councils.
The West Midlands region hosts one combined authority (CA): the West Midlands Combined Authority (WMCA), consisting of 18 local authorities and four Local Enterprise Partnerships (LEPs). As CA, the WMCA is a major local partner for the implementation of regional innovation measures and strategies.

Policy

Policy trends profile:

In November 2017, the UK Government published a new flagship Industrial Strategy which lays down the national plan to boost economic growth, drawing on the country’s strengths in order to embrace the opportunity of technological change.
In the white paper, the Government has identified four Grand Challenges in particular, i.e. global trends that the UK must embrace to harness all the opportunities they bring and in which it has the opportunity to play a global leading role in the path towards the technological revolution:

Put the UK at the forefront of the artificial intelligence and data revolution;
Maximise the advantages for UK industry from the global shift to clean growth;
Be a world leader in shaping the future of mobility;
Harness the power of innovation to help meet the needs of an ageing society.

Key policies highlighted in the document include:

Raise total research and development (R&D) investment to 2.4 per cent of GDP by 2027;
Increase the rate of R&D tax credit to 12%;
Invest £725m (€820m) in new Industrial Strategy Challenge Fund programmes to capture the value of innovation. This will include £170m (€190 million) to transform the construction sector and help create affordable places to live and work that are safer, healthier and use less energy, and up to £210m (€238 million) to improve early diagnosis of illnesses and develop precision medicine for patients across the UK;
A series of Sector Deals, with construction, life sciences, automotive and AI the first to benefit from these new strategic and long-term partnerships with government, backed by private sector co-investment;
Invest an additional £406m (€460m) in maths, digital and technical education, helping to address the shortage of science, technology, engineering and maths (STEM) skills;
Create a new National Retraining Scheme that supports people to re-skill, beginning with a £64m (€72m) investment for digital and construction training;
Boost digital infrastructure with over £1bn (€1.13bn) of public investment, including £176m (€200m) for 5G and £200m (€227m) for local areas to encourage roll out of full fibre networks;
Drive over £20bn (€23bn) of investment in innovative and high potential businesses, including through establishing a new £2.5bn (€2.8bn) Investment Fund, incubated in the British Business Bank;
Create a new Transforming Cities fund that will provide £1.7bn (€1.9bn) for intra-city transport. This will fund projects that drive productivity by improving connections within city regions.

Regarding EU-financed policies, the Smart Specialisation Strategy in England document provides a strategic framework for investments in research and innovation funded by the European Regional Development Fund (ERDF). It points out the innovation priorities of the 2014-20 ESIF programme in the UK, and it has as its main objective to identify the policies and public support available at national and local levels

to help business invest in innovation;
to help Local Enterprise Partnerships (LEPs) and their partners to identify opportunities to benefit from;
to inform businesses, universities and others involved in wider research and innovation programmes, among others.

The Smart Specialisation Strategy in England, as detailed in the strategy document, aims to:

guarantee that proposed actions are based on complete evidence that reflect the comparative advantages of the physical and human assets of particular places in the global economy;
ensure that activities are fully integrated in the local economy and its supply and value chains;
help build connections of ideas, finance and trade with similar activities elsewhere;
promote the use of enabling technologies that can transfer and add value between related sectors.

Innovate UK delivers a range of national programmes that support business innovation across the UK. These programmes include grant funding and loans to support R&D, UK-wide measures such as the Catapult Centres and the Knowledge Transfer Network (KTN), as well as schemes such as the Small Business Research Initiative (SBRI) that encourages lead customers to work with SMEs to address their innovation challenges. Innovate UK works also with the Research Councils to deliver Catalyst funding programmes and Innovation and Knowledge Centres (IKC), along with running funding competitions to help businesses develop innovative products and processes through funding of between £25,000 (€28,315) and £10m (€11.3 million).

Along with these national-wide programmes, regional measures are available to support business innovation and growth, with some being available to the whole region, while others are offered by local organisations (LEPs, CA, local authorities) with different or more limited geographies.

The more recently formed LEPs are not explicitly tasked with innovation policy. Instead, their priority is to support and develop the local private sector and to stimulate local growth. This, however, may include an innovation agenda, depending on the strengths and needs identified within the region. The UK government announced in April 2013 that LEPs would be given the responsibility to deliver a large part of the EU Structural and Investment Funds for 2014-2020 that put forward innovation, research and technological development as key priorities. As a consequence, most LEP investment strategies for structural funds also include innovation.

In Autumn 2015, the BEIS invited businesses, universities, research and innovation organisations and LEPs to form consortia in order to carry out regional Science and Innovation Audits (SIAs) in different parts of the UK to identify individual regions’ specialties and drive local economic development. On the back of a broader Science and Innovation Audit (SIA) at the Midlands Engine geographical level, in 2017 an audit was carried out on the West Midlands Combined Authority (WMCA) area. Within the SIA, WMCA strenghts are identified through the creation of a framework, which establishes four "market strenghts", namely next generation transport, sustainable construction, energy storage & systems and technologies for better health, supported by key components that make up the West Midlands' innovation ecosystem and three supporting "enabling competencies".

In April 2017, The UK Government announced the launch of the Industrial Strategy Challenge Fund (ISCF), designed to provide funding and support to UK businesses and researchers, part of the government’s £4.7bn (€5.5 billion) increase in research and development over the following 4 years. It was created to ensure that research and innovation take centre stage in the Government’s Industrial Strategy in order to improve living standards, create well-paid sustainable jobs and drive economic growth. The funding from the flagship ISCF will be spent across six key areas that the Government, along with businesses and academics, identified as the biggest core industrial challenges where the UK has a world-leading research base: healthcare and medicines, robotics and artificial intelligence, clean and flexible energy, driverless vehicles, manufacturing and materials of the future, satellites and space technology. Innovate UK is in charge of delivering most of the ISCF.

In anticipation of the financial implications of Brexit, the Central Government is planning to devolve more financial resources for local growth to LEPs and local administrations that would eventually replace funding from the ERDF.

Activities linked with Advanced Manufacturing

Activities linked with Advanced Manufacturing:

The Black Country Enterprise Zone has a focus on advanced manufacturing and engineering, aerospace, automotive, and low carbon industry. Greater Birmingham and Solihull LEP also has a focus on advanced manufacturing, especially related to the automotive industry.
The region hosts the Warwick Manufacturing Group (WMG), located in Coventry, which is part of the UK High Value Manufacturing Catapult. The Catapult centres are a network of world-leading institutions designed to promote UK’s capability for innovation in specific areas and drive economic growth. The WMG catapult focuses on providing solutions for Low Carbon Mobility, by supporting the development of innovation solutions in the following areas: Light-weighting, Advanced Propulsion Systems, Intelligent Vehicles and Energy Storage & Management.

Coventry is also home to the Manufacturing Technology Centre (MTC) that represents one of the largest public sector investments in UK manufacturing and is part of the High Value Manufacturing Catapult. The MTC develops and proves innovative manufacturing processes and technologies. It was founded in 2010, as an independent Research & Technology Organisation (RTO), by four institutions: The University of Birmingham, Loughborough University, The University of Nottingham and TWI. The role of this Centre has increased throughout the years to cover not only R&D but also Training, Advanced Manufacturing Management and Factory Design. The MTC develops and proves innovative manufacturing processes and technologies.

Another important organization located in the region is represented by the Institute for Advanced Manufacturing and Engineering (AME). The Institute aims, among others, to research and develop innovative technology for automotive, aerospace, oil and gas, power generation and rail sectors.

Furthermore, the Black Country Skills Factory has been a highly successful project aimed at addressing skills shortages in Black Country Advanced Manufacturing companies. The Skills Factory team have a detailed understanding of training provision in the manufacturing sector in the Black Country and can offer employers impartial and independent advice on up-skilling training courses, Apprenticeships and funding opportunities in the Black Country. Funding was received in 2017 to extend the Skills Factory model to our other growth sectors, and the intention is to expand this geographically into other areas of the West Midlands.

Another key activity linked to advanced manufacturing is the High Value Manufacturing City (HVM City) portal. HVM City is an award-winning digital platform bringing together the region’s total investment opportunity with its ambition to support 10,000+ businesses, whilst at the same time drawing on major capital programmes both in the UK and globally. It’s a business-to-business showcase which highlights the world-class supply chain in thE West Midlands, allowing users to find supplier companies using a wide range of search criteria. HVM City enables users to integrate the supply chain, capturing the products manufactured in the area.

Complete Regional Profile

Economy

Research, Development & Innovation

Latest Regional Innovation Scoreboard results

Governance

support for knowledge transfer and collaboration between the research base and industry;
support for clusters and science innovation parks; investment in R&D infrastructure and centres of excellence.

Since the abolition of the RDAs in 2012, many innovation support mechanisms and their funding have been delivered at the national level via Innovate UK.

Policy

Put the UK at the forefront of the artificial intelligence and data revolution;
Maximise the advantages for UK industry from the global shift to clean growth;
Be a world leader in shaping the future of mobility;
Harness the power of innovation to help meet the needs of an ageing society.

Key policies highlighted in the document include:

Raise total research and development (R&D) investment to 2.4 per cent of GDP by 2027;
Increase the rate of R&D tax credit to 12%;
Invest £725m (€820m) in new Industrial Strategy Challenge Fund programmes to capture the value of innovation. This will include £170m (€190 million) to transform the construction sector and help create affordable places to live and work that are safer, healthier and use less energy, and up to £210m (€238 million) to improve early diagnosis of illnesses and develop precision medicine for patients across the UK;
A series of Sector Deals, with construction, life sciences, automotive and AI the first to benefit from these new strategic and long-term partnerships with government, backed by private sector co-investment;
Invest an additional £406m (€460m) in maths, digital and technical education, helping to address the shortage of science, technology, engineering and maths (STEM) skills;
Create a new National Retraining Scheme that supports people to re-skill, beginning with a £64m (€72m) investment for digital and construction training;
Boost digital infrastructure with over £1bn (€1.13bn) of public investment, including £176m (€200m) for 5G and £200m (€227m) for local areas to encourage roll out of full fibre networks;
Drive over £20bn (€23bn) of investment in innovative and high potential businesses, including through establishing a new £2.5bn (€2.8bn) Investment Fund, incubated in the British Business Bank;
Create a new Transforming Cities fund that will provide £1.7bn (€1.9bn) for intra-city transport. This will fund projects that drive productivity by improving connections within city regions.

to help business invest in innovation;
to help Local Enterprise Partnerships (LEPs) and their partners to identify opportunities to benefit from;
to inform businesses, universities and others involved in wider research and innovation programmes, among others.

The Smart Specialisation Strategy in England, as detailed in the strategy document, aims to:

guarantee that proposed actions are based on complete evidence that reflect the comparative advantages of the physical and human assets of particular places in the global economy;
ensure that activities are fully integrated in the local economy and its supply and value chains;
help build connections of ideas, finance and trade with similar activities elsewhere;
promote the use of enabling technologies that can transfer and add value between related sectors.

Activities linked with Advanced Manufacturing

Repository

Support Measures

Policy Documents

Organisations

European Commission - Internal Market, Industry, Entrepreneurship and SMEs

West Midlands

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Latest Regional Innovation Scoreboard results

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Activities linked with Advanced Manufacturing

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