Jonathan Walker: Why recession's hitting the West Midlands so hard

Jun 18 2009 by Jonathan Walker, Birmingham Post

The weakness of the West Midlands economy has been vividly exposed by this recession.

Yesterday’s unemployment figures show that the number of unemployed in the region has increased by 77,000 over the past 12 months.

This is more than any other region. And the unemployment rate has gone up by 2.8 per cent – also higher than anywhere else.

The current unemployment rate is 9.3 per cent which, as you may have guessed, is the worst in the country.

But it wasn’t like this before the recession. The North-east had the worst unemployment rate before the banking crisis hit.

What’s happened is that unemployment has risen more quickly in the West Midlands than elsewhere. This has happened despite the devaluation of Sterling, which should have helped manufacturers in the region by making it easier to export, and despite government efforts to get credit into the manufacturing sector.

Ministers initially predicted that the recession would hit all parts of the country more or less equally. That hasn’t happened, and it is the West Midlands which has suffered more than anywhere else.

We need the Government to accept reality and funnel support, such as loan guarantees, where it is really needed – to manufacturers.

In particular, ministers must support the shift towards high-technology manufacturing, such as Jaguar’s research into “green” vehicles.

At the moment, they say they do. Indeed, transforming Britain into a “low-carbon economy” is a favourite topic of Gordon Brown and his business secretary, Lord Mandelson.

But as became clear at a recent hearing of the Business and Enterprise Select Committee, government support for green manufacturing just isn’t getting through.

The Automotive Assistance Programme, launched with much fanfare six months ago, is supposed to provide businesses with loan guarantees for investment in environmentally-friendly technology.

So far, not one business has benefited.

Local figures show that, in Birmingham, 48,493 people are now claiming Jobseeker’s Allowance (the regional figures show unemployment, which is not quite the same thing) – up from 32,963 a year ago. That’s an increase of 47 per cent.

It means 7.7 per cent of the workforce in Birmingham now claims the allowance. The only place with a bigger unemployment problem in the region is Wolverhampton, where the claimant rate is 7.9 per cent.

The increase in places where you wouldn’t expect it is also worrying.

Lichfield, in Staffordshire, had 771 claimants a year ago – now it has 1,998. In other words, the number is two and a half times what it used to be.

Areas which haven’t known real unemployment for decades are now finding out what it’s like.