Freeports to benefit Midlands manufacturing says former government minister

The manufacturing sector in the Midlands should “undoubtedly benefit” from plans to situate a freeport at East Midlands airport, a former government minister has said.

Margot James, Executive Chair of WMG, University of Warwick and former MP and Minister for the Department for Digital, Culture, Media and Sport from January 2018 to July 2019, said that government support for freeports means “they will probably work” as long as the freeport acts as a “catalyst” for investment in the wider Midlands region.

Speaking at the  ICAEW Midlands Economic Summit yesterday she commented: 

Undoubtedly the manufacturing sector should benefit from freeports but it depends on the level of displacement versus the freeport acting as a catalyst for production and investment outside of the actual area of the freeport.

ICAEW’s Business Confidence Monitor (BCM) report, published last month, found that confidence among businesses in the Midlands returned to positive territory in the first quarter of 2021, despite the damage inflicted on the region’s large manufacturing sector by supply chain disruptions and weak global demand.

Speaking about manufacturing specifically, Margot James added:

Within manufacturing, there have been winners and losers, but in the West Midlands we have considerable strength in both the automotive sector and aerospace sectors, both of which were hit very hard by the pandemic.

And because we have such a fabulous supply chain in the Midlands to those sectors, further down that supply chain the effect was, in some cases, disastrous, with some businesses going under completely, and all facing huge cashflow difficulties.

Panellist Kevin Harris FCA, a managing partner at accountancy firm RSM, ICAEW Chartered Accountant and Executive Board member at Midlands Engine, was confident about the prospects of an economic rebound in the Midlands saying:

There’s been a real shift of late to people looking at rebuilding and future growth, which gives an indication of where people’s minds are at. Everything seems to be pointing towards the fact that there is a lot of pent-up demand and a lot of businesses are very positive about what the next stage may involve.

Harris also believed the new freeport would be a “game-changer” for the region and would benefit the whole of the Midlands. He added:

While the sites are based in the East Midlands, it will have enormous benefits for the Midlands as a whole. My view is that it’s a very big positive, a game-changer for this region, because of what spins off from it. It’s not the freeport in isolation, but everything around it as well.

Also commenting on the role of trade in the economic recovery, Dr Mick Carling, Head of Partnerships, Midlands, Department for International Trade, said:

This strategic shift to global Britain in making our own trade deals is important and will really help.

Among other key challenges facing business cited in the BCM report, late payments were a more pressing challenge for one in three companies in the East Midlands, with the squeeze placed on business activity and finances by the pandemic clearly the reason.

Responding to the issue of late payments, Philip King, the Small Business Commissioner, also on the panel, said:

We need to be avoiding late payment, not resolving it. I’ve talked to many small business owners and heard harrowing stories of mental health issues as a result of not being paid. Payment, for me, is an articulation of the value businesses put on their supply chain and whether they see their suppliers as partners or someone to be exploited.

Overall, business confidence in the UK was back in positive territory in Q1 2021, the BCM found, likely boosted by news of vaccine approvals and its subsequent rollout.

Commenting on the Summit, Sophie Dale-Black, ICAEW Midlands Regional Director, said:

It is testament to the standing of ICAEW Chartered Accountants in the Midlands that we could have speakers of this calibre appear on the panel and give their thoughts on the latest findings of the BCM. We hope the region can build on the positive business sentiment from Q1 2021 and make a strong economic recovery this year.

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