Title: Andrew Moxey Duration: 1.25 mins Speaker: Andrew Moxey I'm gonna talk about the common agricultural policy. And going forward what you really need is something that moves beyond just agriculture, and it needs to take account of the fact that agriculture is the main land use across most of the UK, because there's a bit of forestry, but agriculture is dominant. And that's certainly true in the devolved administrations. And in addition to producing food, it also produces a range of environment goods and services, or as we now call them eco system services, and it's also very important to rural communities. But the common agricultural policy as currently configured, only really gives money for agriculture. It doesn't really value and support wider eco system services or rural development. And if you want to take the opportunity that Brexit gives you to have more dynamic flexible policy, then that's what you need to do with it. Again, I'm gonna talk about agriculture and animal health, which are devolved policy matters. And certainly from a Scottish perspective, we have very distinctive policies. So, agriculture in Scotland is supported in a slightly different way, has slightly different policy priorities. And on the animal health side, we also have different policies, because we have a different animal health status, and we also are moving towards having our own independent livestock traceability system. And the view here is that it makes absolutely no sense to roll us back into a UK or GB wide system. END OF RECORDING Title: brexit edin duncan high Duration: 6.44 mins Speaker: Duncan The difficulty that we've had in the UK of the pressure regions of southern Britain having inadequate investment in schools, infrastructure, and so on, alongside the problem of really poor spatial policies for lagging industrial regions in remoter rural regions. It means that after Brexit, we really have to have a much more effective spatial policy. The concern would be that for the older industrial regions, the regions in a sense that benefitted most from being in the European Union, such as the North East and the Welsh Valleys which voted pretty clearly against being in the Union. We had a failure of UK spatial policy for that. So that actually having a coherent strategic economic development approach that integrates these regions or adjust them, has to finally be done after almost 40 years of de-industrialisation. So, in that context regional policy has to be important. At the moment, I'm extremely concerned that the UK Government doesn't seem to have thought about what regional policy might look like, and in fact in the last 10 years, it's been rather edged into regional policy simply because we were in the European Union. The consequence of that, those of us in the regions are very concerned about where national spatial economic policy might go. As for the rural areas in the CAP, when Michael Gove became the Secretary of State he had a clear moment thinking about how rural policy was not the same as agricultural policy. And that the CAP might be used in rather different ways, promoting economic development, ecological services. That was actually I think the right way to be going. My concern will be that in the absence of sufficient public spending resource because we'll have less public resource to spend. That the UK Government will go in for a whole series of non systematic spatial deals - in other words, regional policy and rural policy might become like city deal policy, which might be individually fine, but they don't add up to a coherent system of development for Britain. So, I think those of us that are concerned with spatial development are really rather anxious about how things will now develop. I think that the most significant effect will be reduced level of output, growth or output growth. And with it, reduced resource from the public sector. In the Scottish context, we have an East of Scotland which is prosperous, and which growth rates are quite high, and in which focus particularly around Edinburgh where there are relatively more economic base, where income levels in the metropolitan region, the region competing effectively. I actually think that it will adjust and thrive regardless of this scenario. In that sense it's kind of like a mini London. It has these adjustment capabilities. The West of Scotland, that's more problematic. We've seen Glasgow finally get to the point of beginning to stabilise it's economic base and expand a little. There's going to be a really serious negative shock in the West in the context where just in a sense, stopping Glasgow becoming the Detroit of the UK, has been a major challenge. Brexit's not gonna help that in any regard. And I think that we have to think very seriously in the Scottish context, about do we connect to Europe, how do we connect to Ireland? How do we in a sense, reposition ourselves? And I think that will have fundamental issues in relation to the debate about the organisation of Scottish economic policy and indeed Scottish independence. So I think for us in Scotland, this is just another change in the constitutional dynamic that I think will now continue. I think that the - in the context of all of the regions, and policy, I think we need much more coherent strategic policies applied at each regional scale. And then scales within them - metropolitan areas and so on. I think in the English context, city deals have induced effective strategic decision taking about investment and the economy in a number of metropolitan areas. But missed out in others. At the same time, broader regional framework for decision taking is weak. I think in the Scottish context, the Scottish Government have actually taken a number of approaches in economic policy. For instance, emphasising [5:00] of growth, which I think has been a more effective way of thinking about the challenges we have than you would find prevailing say in the regions of England. So that I think there are things that you can draw from that. I think that there are also things we learn from other areas. Scotland learns a lot from the North West in terms of thinking about infrastructure and the economy, and the way that we take things forward. In terms of the kind of architecture of the delivery of policy, I think that in Scotland institutions are still in floods with the National Enterprise Agency, which has I think again something that with the scrapping of the Regional Development agency in England, I think it's still been to Scotland's advantage, with Scottish enterprise in play in the field. But I think that there's also the value in local enterprise partnerships, and perhaps that's something we need to learn from other regions in the UK. So I think there's a mix of lessons that I think that what you can see, partly because of its historic dependence on the work grant and that in a sense being reduced, we now have to make our own way to a much greater extent. Strategic economic decision taking in Scotland now has to be better than at any time in the last century. And I think that we're beginning to put in place some quite effective mechanisms for doing that. So I think that we have to take an outward look at what other regions and other countries are doing, but equally I think there are things here that should be of interest for other localities. END OF RECORDING Title: Brexit Leeds interviews Alison McGovern mp high Duration: 2.45 mins Speaker: Alison McGovern So, for those of us in the North, the really important economic challenge that we face after Brexit, is the fact that a lot of our economies are based around manufacturing. So even if you're part of the service sector in the North of England, especially Merseyside where I'm from, or Yorkshire where we are today, there's still a manufacturing base, and the services rely on that manufacturing base. And if we Brexit in a way that is bad for integrated supply chains, then that will undermine the business case for that manufacturing industry. So when, for example, a car plant in my part of the world is going for the next model, you know, Brexit might increase the cost base quite radically, and that will be bad for jobs and bad for investment in the North of England. Well, the fact is when it comes to urban policy, I don't really think we've had a particularly good urban policy over the past 10 years. So, where things like the EU confusion fund was there to improve that integration between people in cities and urban areas, we're gonna have to take that job on ourselves. And I would argue that some of the issues of people feeling not included in the economic growth, have actually been around for a long time and it's not actually a problem to do with the EU, it's the UK Government in the past decade really hasn't had a good policy of urban integration. It makes everybody feel that when a city grows, their chances of economic success is moving ahead with it, and that's where our attentions have got to be now over the next decade to come. Well look, in the end, people feel like they're able to move ahead and their city or their town is able to move ahead, if it's got economic prospects. So you've got to have powerful devolved governments, like London has, in the North of England. And that means maybe taking the transport for the North infrastructure, and really bolstering that with significant powers to deliver infrastructure. That means towns and cities being able to have a sense of plan for their future economy, and most crucially having the powers to deliver it. So whether that means taking things like education powers away from Whitehall, and devolving them to towns and cities in the North - we've got to have real and practical powers for economic development. Well I've already learnt a great deal from the work that - that has been done, that we're talking about today. I feel like the discussion that we have about Brexit in Westminster and Whitehall, has been pretty political and not very much about the economics of the situation. So I think it's incredibly important that the Institute and others keep going with their research and in the end that filters through, and we'll have better economic policy for it. END OF RECORDING Title: Birmingham Workshop Intro Duration: 17.09 mins (from 20.29 mins onwards) Speaker: Lloyd Broad, Birmingham City Council **** Well good morning. When I came in this morning Raquel said to me 'Lloyd, you're playing at home today, you're in the Banqueting Suite, you're in the local authority', so I feel quite relaxed and quite comfortable. However, I am surrounded by a group of academics so I tread with caution in terms of providing, I'd like to think, pearls of wisdom but I'm not quite sure there will be pearls of wisdom with regards to a city perspective, or cities perspective, on the impacts of Brexit. Just picking up on two things that were introduced. Firstly there is a real lack of evidence, particularly at a local level. What's quite clear is the debate is taking place at the level of nation states. Even through the media all you hear is about what Ministers are saying, what Michel Barnier is saying and there is very little in the public domain in terms of visibility about the real impact in cities. I think partly that's because gathering evidence is quite difficult because we're trying to gather evidence on the unknown. We know what we have. We know what we've been doing. We know what benefits it's gleaned for our cities, but if you just use the economic forecasts that were given in the pre-referendum debates, you know, they didn't come to fruition. So people have a distrust of evidence and statistics. So this is a really difficult task and I think it's something that we as a local authority in the cities are really keen to try and understand because we know there's an impact, or there will be an impact. But nobody can quite be sure what that impact will be and I think that's what we're really keen to unpick. So the second thing that I've picked up on is your point about the breaking down of silos. I think it's critically important that academics listen to business, business listens to academics, public sector listens to business and listens to academics and collectively we can try and make some sense of all of this. But making some sense of it is, as I said, quite difficult. So what am I going to do? We have 322 days to go before we leave the European Union, not that I'm counting, but 322 days and I referred to pearls of wisdom and I was wondering whether two fundamental questions were going to be answered today for me. The first being 'what actually is a Customs Partnership?' and secondly 'what does Max-Fac actually mean?'. Maximum Facilitation allegedly but in real terms what does that mean? The fact that Ministers can't quite agree on which of these options is the best thing for us and the EU don't understand either of them, it doesn't bode well that any resolution will be understood in the next 322 days. But look, I'll leave those tricky issues to you academics and I'll just deal with the stuff that cities are worried about. So my intervention today is briefly going to focus on what we as a city and as a collection of cities have been focusing our energies on since June 2016 and that will have a local, a national and an EU/European dimension to it. So firstly at a local level, effectively it'll be on two key things. We created something called the Brexit Advisory Group and it was a group of stakeholders around the City of Birmingham which soon became a group of stakeholders of the West Midlands, to effectively start to have some thinking from academics, from representatives of business, civil society, etc, etc, local enterprise partnerships, on their thoughts in terms of not just the threats of Brexit but also the opportunities of Brexit. Some may call it rhetoric but what we often say is 'we have to maximise the opportunities of Brexit'. We can't continue to cry in our Cornflakes that it's the worst thing that's happened since whatever. We have to do something, we have to take corporate, civic ownership of trying to make sure that cities - and the focus of my intervention is about cities - don't feel the full force of potentially what could happen to us in terms of impacts. So the Brexit Advisory Group sought to pull some thoughts together and eventually it arrived at a position statement and ultimately those things led to key priorities. For example, what we want to see is leadership in a new industrial strategy, we want to make sure there's a clear strategy about how repatriated funding will flow down to local level, we want to understand the impact of productivity, skills and labour markets, which is where this impact in terms of sectoral analysis is critical. We need to ensure there's more investment in key strategic issues, whether it be broadband, whether it be transport, whether it be other forms of economic development. We need to maintain key investments across the country and not see a dip in that. And we need to plan for a more inclusive society, more inclusive growth. If Brexit has told us anything it's those that voted to Leave are most likely to be those that feel that they've been left behind. So we feel a sort of responsibility as the corporate landlord of all of our family here in Birmingham, our children which are adults and children of course, but we feel a sort of responsibility to try and take some ownership of talking and working with others, helping others break down the silos and trying to make some sense of what it's going to mean to local people. So to that end we also set up a commission that's been politically led here in the local authority and what that seeks to do is utilise the raft of evidence that's coming forward from a raft of academic partners, whether it be City-REDI at the University of Birmingham here and the projects that it's partnering through what we're talking about today, the Centre for Brexit Studies at BCU that's doing a lot of great work, and of course Aston University and of course David's here today to talk about the impacts on advanced manufacturing, or automotive engineering and all of those wonderful things that are important to a city like Birmingham or a region like the West Midlands. But ultimately the work that we've been doing is delivering one clear message to government - and this is a government that's not talking to the cities, remember - and that is that there's one simple message: we need to accelerate devolution and use localised, industrial strategies of the basis for delivering that. If that is enabled, cities will maximise the opportunities of Brexit because it's only cities that can do it. Nation states can not do it. So this is critical, devolution is critical, how industrial strategies play out across business, academia and our public, is critical. So, at an EU level, or at a national level I should say, core cities and the Local Government Association are two key networks that we as local authorities engage with and I'm sure to many people they're be invisible to most. Who are core cities? What is the Local Government Association? But sort of behind the scenes, and it is behind the scenes because government won't speak to us, we've been working away trying to understand what our collective position is, what can we do to enhance the voice of cities and increase our attempts to lobby in the most appropriate way, and that's proven to be difficult. We have developed a series of papers and concepts and priorities that I won't bore you with today but we do have positions - there's a Brexit group in Birmingham where there's a group of core cities who are, actually core cities for those that don't know are the ten largest cities, ten largest economies, outside of London - Birmingham, Manchester, Liverpool, Leeds, etc etc. And effectively, I mean I'll just read - I tend not to read normally during presentations but why are we working together as a collective of cities nationally and then across Europe, and that's because 'the debate has been dominated by the role of nation states. Whilst those roles are clearly important, it misses the significant economic and social role that cities play, and that direct relationships between cities are critical to the future success of all European nations. The real flows of economy, knowledge, skills and innovation are between cities and their institution and not just nations and nation states. Many of the biggest challenges we face cannot be solved by just national interventions alone and it's by networks of cooperating partners in cities and cooperating cities across Europe', for example on climate change, air quality, migration, diversity, that's what makes a difference to Europe - not the European Union, but Europe. So it's for these reasons why the role of cities and the voices is critically important. So how are we trying to get that message across? If this is what we're doing nationally by gathering thoughts across the UK core cities and the Local Government Association, but the UK government is not prepared to listen to us, we've needed to take the message further afield. So I just wanted to share with you one thing that we did. You may have seen on BBC News a couple of months ago in February but we arranged that the core cities, we arranged meetings with Michel Barnier, the chief negotiator for the EU and Guy Verhofstadt who's the chief negotiator for the EU Parliament, and we had some real serious messages we wanted to deliver to them. If the government aren't going to listen to us then someone else will need to. So we got those meetings, we had a whole day on the 19th February in Brussels and they were really, really interesting meetings and we laid out quite clearly what our expectations of a post-Brexit environment should look like. We gathered support of another network in Europe called Euro-Cities. Birmingham was one of the founder members of Euro-Cities back in 1986, it also established its Brussels office, the first Brussels office back in 1986. We still have it, just, because we're skint, we haven't really got any money but we're managing to hold onto a Brussels office through other forms of funding and we were co-founders of Euro-Cities which is now the largest and most respected network of Mayors and City Mayors across Europe, over 140 cities. And they, as a network, have supported the plight of UK cities to try and maintain the closest possible ties with them moving forward in a post-Brexit landscape. We may be leaving the EU but we're not leaving Europe and they're very keen, and their message is the same as us, we need to somehow try and maintain all of those tools, those enablers, those initiatives, that enable cities to work together, to learn from each other, on all the key issues that affect us. So that's what we did between the core cities and Euro-Cities. We developed some shared objectives, we've identified those enablers and those leavers that enable us to work most effectively together, whether that's barrier and tariff-free trade, whether that's access to funding programmes, whether it's access to skills, knowledge and talent, through the mobility of people, or whether that's engagement in broader key priorities like working together on sustainable development goals, the EU urban agenda, etc. But ultimately we had a message for Europe that UK cities and European cities effectively we have a key mission: we want to be prosperous cities, collaborative cities and open cities. So we were delivering key ideas of how we can try and maintain that post-Brexit, for example around migration we need to focus things more technically around what cities need in terms of skills and migration, so for example the use of workers based skills audits. We need to understand - and this is where this helps in terms of analysis on trading relationships; I'm aware of other work that's going on, not just this, that tries to understand the real nitty-gritty of trading relationships between cities and not just nation states. We're also looking to have a joint cities commission. We want a place in Europe where UK cities can work with the key European institutions to avoid a cliff-edge type of scenario where we want to oversee regulatory transition and convergence because we really need to understand what that really means for cities and we want to be around the table when that happens and not just let the government do it for us. We think we can have ideas about developing macro regional strategies around territories or around sectors. What can we do more effectively together that isn't just necessarily in the context of this European Union framework but based on other issues that bind us and other places, territory or sector. Perhaps we should have an ability, whether that's at a city, regional level or a national level, to buy into collaborative programmes. Your Horizon 2020s, your [Inter-Reg - 0:33:57] Europes, all these types of things. Even developer cities, universities forum to make sure that that collaboration and that place can take place. Euro-Cities are supportive, and other European cities, are supportive of these messages and our message to Michel Barnier and Guy Verhofstadt is don't take away those enablers, don't take away those leavers. Enable us as cities to continue to work with cities. And one final thing around the open cities concept is around - this is around people, citizens and businesses, not around nation states and the whole dodgy subject of EU citizenship and migration and issues like that - we know that there is a court case going in the Netherlands where some UK people based there are challenging the very human rights of having European citizenship taken away from them. That's going to be quite interesting to understand that but, you know, for the 17 million people that voted to Remain, perhaps they can pay for EU citizenship, 20 quid a person, that will add another 340 million to the EU coffers that we've pulled out of. So there's thoughts there about EU citizenship. But most importantly, and going back to why perhaps we left the European Union - or we're leaving the European Union - in the first place, the reason for Brexit, there is an issue of democracy, citizenship and cohesion and any self-respecting city needs to stand up and do something about issues of democracy, citizenship and cohesion. So, that's where I'm going to leave it in terms of what we're doing locally, nationally and across the EU. The outcome of the meeting with Michel Barnier and Guy Verhofstadt is that we've been offered a UK cities hearing in the European Parliament. We're hopeful that will be in July. If it's not in July it will be in September this year. It's interesting that you'll be taking the outcomes of your research to the European Parliament as well. In the interests of breaking down silos I think we can try and align some of those messages and I'm sure you'll have some of that evidence that will support some of the key things that we want to achieve in terms of mapping out what a post-Brexit vision will look like for the UK. That's all I'm going to say apart from one final statement. I always like to leave any contribution I make to these things with something that's a little bit more humorous and I happened to come across - and I've been following the Brexit debate and commentary in various places - and I found one this morning. I read it coming in on the train into work this morning and it was a quote from the European Union Budget Commissioner. It came from a German, would you believe, a really humorous, wonderful statement from Gunter Ertinger - I'm sure you know him really well - but he was addressing some school children in Germany and he was posed the question 'what do you think of the UK government?'. Quite a provocative question you may ask. His response was quite fascinating. He said 'Mrs May is weak and Mr Johnson has the same hairstyle as President Trump; that says it all'. END OF TALK END OF RECORDING Title: Birmingham Session 1 Duration: 42.35 mins (from 15.08 mins onwards) Speakers: Professor Philip McCann, University of Sheffield Charlie Hopkirk, Black Country Consortium Nicola Hewitt, West Midlands Growth Company David Hearne, BCU, Centre for Brexit Studies **** [Transcription started at 15.08 mins as requested] Charlie Hopkirk Good morning. So I'm from the Black Country Consortium and we essentially are the delivery and strategic day to day for the Black Country Local Enterprise Partnership. So obviously not an academic unit or anything like that but we have been quite heavily involved in the sort of Brexit process and trying to understand the concerns and the issues that Black Country businesses might be having and basically where we can try and assist and help them, I guess. So I'll just quickly go through the context and then sort of just a little bit about how our Brexit group came together and then just the findings that we've found from discussions with businesses, and then we've also put together a sort of [ask - 0:15:55] document which we sent to the Department for Business in January, so I'll go through that as well. I won't delve too much into this but obviously at the Black Country we work to stimulate economic development in the area, working across a range of themes, business people and place more generally and we've got an in-house intelligence team, so I'm a research analyst within that. So as I say, whilst not an academic team we do have some research and analysis provision, mainly for the Black Country but also for the West Midlands Combined Authority as well. So just to add a bit of context as to why the LEP wanted to dig deeper on the Brexit issue without the obviously need to do so anyway. There's just some sort of headline statistics which show that the Black Country is quite heavily reliant on EU exports. So you probably won't be able to see it very well but it shows exports to - the Black Country, 60% of their exports go to the EU. I've also put Birmingham and Coventry on there as well which are significantly lower. So compared to the UK average of about 45%, potentially they're more reliant than some other areas. And similarly - you won't be able to see these at all unfortunately - but just some research, some earlier research a couple of years ago - well not a couple of years ago, 18 months ago maybe from KPMG - I think that one's the University of Sussex just showing the exposure and Philip talked about this a minute ago on the sectoral basis. But just some key Black Country sectors such as metals, automotive manufacturing, even oil and gas and industrial production. According to that research we're heavily exposed to Brexit in terms of trade. And then again I think this was more detailed on different situations, all of them showing a sort of negative output from the difference between exports now and post-Brexit in different scenarios and some sectors worse than others. But significantly some of the industries which are important in the Black Country so a lot of the supply chain metals, manufacturing and that sort of thing. And moving onto the labour side of it, again I think this is from the Manufacturing Association showing the percentage of workers in manufacturing that are from the EU. West Midlands is around 14% which is about average for different regions but substantial nonetheless. And then a sectoral base here. Again, you've got sort of metals, automotive manufacturing at around 10% of workers are EU. So these sort of headline data was useful in the LEP thinking that they needed to be proactive on this and sort of set up a sort of similar to the advisory group that Lloyd mentioned earlier and just understanding the concerns of business with the objective to sort of help in any way that they can. It initially started with a round table in August 2017 where we brought some businesses together and basically just made it an open forum of 'tell us what you think about Brexit at the moment, how you think it's going to affect you', particular themes and that sort of thing, what their worries were and then potential opportunities. We selected from pa cross-section of sectors but focused a lot of manufacturing as you can probably imagine is natural in the Black Country with roots there and everything like that. We also tried to choose businesses that we knew had a high share of exports, particularly to the EU, obviously to see what they thought the effect would be. That was sort of supplemented by this document I put together which, like the previous slides, just basically gave some of that context in terms of some of the headline data, which although there isn't that much we just rooted around and had a look at that. Further discussions have followed in the last year within the Brexit group with a sort of fluid membership structure. So we've had members that have been there the whole time, we've spoken to different businesses as well. So that's sort of evolved into being more strategic and thinking about how we can directly try and lobby the interests of the Black Country businesses. So we've been in partnership with the Black Country Chamber and the Department for Business have also had people at the meetings as well. So we basically got together sort of the end of last year and thought what can we actually do to try and put our points across rather than just talking about it I guess? So in January we sent a letter to Greg Clark, the Secretary of State for Business, along with a document of asks. So we had eight asks which were, we wanted to put across sort of one business voice for the Black Country essentially on what we feel the evidence we'd got could help in the post-Brexit period I suppose. I'll just take you through some of the findings from the discussions and then the asks themselves briefly. So they naturally fell into these three categories, mainly trade and labour the key areas post-Brexit and there's some stuff on funding as well. So this is trade. I don't know what's happened to the headings but this is the trade bit. So the key thing that came out was the lack of certainty. I mean it's obviously the key thing that businesses talk about, they see themselves as adaptable to anything but at least knowing what's going to happen or at least some idea of what's going to happen, so that was really key. Maybe more worryingly some businesses reported some hostility from EU customers and that quote there sort of extenuates that. So, 'since the referendum, some EU customers have discontinued their interest'. We were quite surprised to hear that businesses from the EU were literally turning their back on some of the customers from the Midlands and that's particularly, as has been mentioned, in the supply chain and component manufacturing. So I think one of the key points is that some of the small parts that go into all sorts of stuff - automotive, aerospace, all this sort of thing - many of them that are possibly made in the Black Country and other areas of the West Midlands, unbranded and not protected and with the sort of non-tariff barriers potentially could ensure they move to other areas of the UE post-Brexit. So that was something which really came out. And then on a different point which probably Brexit is just focusing the mind on this sort of thing is that the Department for International Trade advises working locally and they're not proactive enough, sort of reacting and not really doing enough. I think there's only sort of five or six covering the whole of the Black Country which isn't really good enough according to the business. And all of these are sort of more concerned with the smaller firms that have obviously less knowledge in that sort of thing, and the ease of UK/EU trade just being taken for granted really more generally. There was some positive stuff in the short term around low pound and the potential for sort of reshoring post-Brexit but generally there was just an urge for certainty and just knowing what was going to happen. It's an easy thing to say but that was what we were hearing. On labour there was real concern around any reduction in EU workers. There was some sort of again, surprising comments about the quality of UK workers compared to EU workers. That quote there sort of mentions that point about how important EU labour has been in the past decade and I suppose there's a misconception in some areas around this being low-skilled labour but here that's not the case at all. The EU workers have been working across skill levels for many years and yeah, generally there's a huge concern around the potential loss of that and some businesses have already seen a trickle of EU workers leaving, which I think is coming out in the official statistics a bit more now. So the second point, the need for more assurances to be made on EU workers. I'm not sure whether anything recently has changed that and there's some more specific points about the immigration process which I won't go into too much detail on that. Generally there was this real feeling of the country not doing enough to make EU citizens feel welcome, which is concerning for the businesses' workforce. And then obviously at the end there's a bit more positivity of making an opportunity for a more focused skill system, so focusing the mind on the UK skill system, although again this is possibly more a long term ambition. This is just the funding bit which I'll go through pretty quickly. Obviously many projects in the Black Country and the wider West Midlands funded by structural funds in the past. There's some figures on there, so a few hundred million Euros. Generally the main concern was around the Prosperity Fund and whether that would actually reach the regions. I don't know, whether it would have the same effect as the structural funds, but again opportunity wise there's a lot of criticism over the EU system for small business funding so I suppose businesses were hoping that post-Brexit the UK government would be able to provide a more flexible, less bureaucratic system for business funding. So I'll just - basically these were the asks that we sent to government. These four were on trade, so clarification, more certainty, smooth system and then there was sort of providing guarantees over the rights and then basically a lot of - some of them were quite general, some of them more specific than others. What we're doing next is hoping to get a round table session in Westminster with the Black Country Chamber, still providing that unified Black Country business voice and also adding to the evidence base which obviously today will be useful to hear what's said. And then just generally representing the Black Country businesses to hope for that seamless as possible transition post-Brexit. Sorry for the rush at the end. Chair Thank you very much. Sorry we have to rush on. It's actually good to hear all the stakeholders' voices. The next one is Mrs Nicola Hewitt, the West Midlands Growth Company. Nicola Hewitt Good morning. I work for the West Midlands Growth Company. We are the investment promotions agency, we work across the combined authority footprint working in very close collaboration with the three LEPs of the area as well as the local authorities and we work to promote the whole region and specifically the cities obviously of Birmingham, Wolverhampton and Coventry. My talk is slightly different to those that you've heard already but hopefully it will be useful. So when we talk about the investment promotions, we promote the city and the region and all of its nascent strengths. So when we go out we promote the region and work with foreign owned companies both locally and then internationally. We look at the promotion of our strongest sectors which are obviously business and professional services, the technology and creative services, food and drink, and obviously automotive and advanced manufacturing, which would include rail and obviously aerospace. We also then work very closely with the LEPs to promote the growing and emerging sector strengths that we have in the region, which are life sciences obviously and low-carbon technologies, specifically with regard to batteries and all of the innovation that's happening down with Warwick Manufacturing Group and Coventry, and when we promote the region we promote very much on the things that make us different and they are based very, very strongly on our population. So when you're promoting and competing internationally you have to have a strong population and a certain size of population, so when we promote ourselves regionally we can talk about 4.3 million whereas if you talk about one of the particular cities your region is very small. So therefore when you're promoting yourselves in say America or Germany or China, you need to have that density of population, hence why you need a promotional and regional footprint. So we promote the strength and the youth of the population, which is very important and of huge interest, that flow of talent to business. We also then leverage very very strongly the R&D strengths of the area, as referenced by other speakers, and then we look at things like cost of strength of businesses as well as our fantastic quality of life. So when you take all of those things together, added into that the effects of the investment infrastructure and the investment in the whole region coming out of the devolution, you realise that we actually at the moment have a very very strong appeal. Testament to that is the fact that we've been incredibly successful with regard to attracting foreign businesses to come and invest here. Over the last 10 years there've been over 971 projects and of those, if I can just check my stats, between the USA, China and India, non-EU countries obviously, we had 336 projects, over 26,000 jobs. So that is very strong and on the face of it looks very positive. However, below that the strongest nation is obviously Germany, as was shown by Philip's slides, and what is perhaps hidden underneath that as well is that our positioning until the vote was obviously you would come and you would set up your businesses here because then we are the doorway into Europe. That premise has obviously been rocked fundamentally and obviously the amount of uncertainty that has been created by the Brexit vote - and I'm surprised nobody's used the word 'uncertainty' yet - but the amount of uncertainty created by that vote has fundamentally affected business, the way they're looking at their plans and that has affected our flows of FDI immediately following that vote. So just before we talk about more direct effects of Brexit, I wanted to just put a little bit of a wider context into the discussion as well because, you know, Brexit is not obviously the only thing happening and when we're looking at investment and the opportunities for the region, we have to then look at also other wider longer term economic impacts which are having as fundamental effects on our ability to attract investment, as well as Brexit. So for us these are things like the Internet of Things and the Fourth Industrial Revolution. So if you think about IT and how there have been some huge, and are continuing to be huge, dramatic changes in IT, we have new start-ups, SMEs that are able to absolutely challenge huge global established players. If you think of the likes of Uber, if you think of the likes of Instagram versus Kodak, you know, we are seeing that IT and that disruptive technologies are having a fundamental affect on the way service organisations are structuring themselves and that, you know, historically whereby perhaps people would have put large groups of people in low-cost areas of the world, now with new disruptive IT technology that is no longer necessary and that is no longer applicable for some large service organisations. So we are seeing the way that big global companies are looking at their supply chains and footprints, is fundamentally changing and that a lot of that is being driven by IT and technological revolution. Also with large corporate organisations, when they are looking at setting up and looking at their global footprints, they're looking at doing a lot more collaborative research with very strong R&D clusters. So for us as a region with the strength of our R&D institutions within this region, that is providing us with opportunities because big businesses are looking at R&D strengths and can they collaborate openly with clusters and R&D institutions, that is one of the key drivers of investment now, as well as cost of manufacture and labour etc. So IT and R&D is a key driver as well as Brexit. And then also if you look more widely at this Fourth Industrial Revolution, obviously the Internet of Things is affecting not only automotive, advanced manufacturing supply chains, it's affecting supply chains and the way businesses are set up across every single sector and the slide - oh, I've skipped one - the slide here summarises some of the changes that are happening with regard to those large global supply chains and I'm sure David and Nigel are going to talk about these later. But you know, what we're seeing is actually people are looking at how they can become more proactive and perhaps have some more bespoke offers for more local markets, that is actually creating some development opportunities for us here in the West Midlands, irrespective of Brexit. So as people are moving to have supply chains located nearer their markets with supply chains that have quite sophisticated technology and IT infrastructures, you know, if you think of our heritage in advanced manufacturing, innovation, IT, all of those things are actually going to be providing us with opportunities going forward, irrespective of the Brexit conversation. So I just wanted to highlight those things to say yes, this whole seminar is about Brexit, but you have to put it into context of those wider, economic changes as well. So if I move on more directly to that while Brexit question, we saw with regard to the investors with whom we work very closely that after the vote on the 23rd June, we saw an immediate effect. So obviously the change in the pound gave rise last summer to a huge amount of increased interest in capital investment because people could get, quite frankly, more for their money. So we saw a huge amount of interest and we saw a huge interest in the region, you know, working with the team specifically at Birmingham City Council with [0:35:21], you know, we saw a lot of interest in China, the Middle East, America - all on the sort of value that they could get with Britain due to that drop and rise in the pound, the diminution in the value of the pound. But also on the flipside, on the negative side, you know, according to a recent survey from the Society of Motor Manufacturers and Traders in July 2017 last year, they sort of noted an immediate drop-off in investment. So in 2016, £1.66bn was invested into the automotive sector and actually that was 30% down than 2015 when £2.5bn had been invested into the automotive sector. So you can see straight away there were some positives and there were negatives coming out of that Brexit vote. The effects were pretty immediate. Just moving on to how it affects a range of the different industries, I know colleagues are going to talk about advanced manufacturing later but you know, from our point of view we work very closely with supply chains linked to advanced manufacturing. If you think of your average life cycle for new product coming to the market is about 7-10 years, really what we're seeing is if investment decisions are not made now or are delayed over the next 12 months for those cyclical cycles of product development, that could have a long term effect on job creation or job sustainability here within the region, and that is affecting the supply chain day in, day out. So we are working with investors, we're trying to encourage them to come to the city and they're saying 'yeah, but people haven't made their decision yet. That investment isn't coming through yet' and that affects all levels of that advanced manufacturing from rail, automotive, etc. If you then look a little bit more closely at consumer manufacturing over there on the right, you know, obviously their product development cycles aren't so large, they have much shorter product development cycles but for them the big issue that they are facing is the supply of labour. So the questions that are being raised by Brexit all in around labour supply, again that is making companies, they don't like the uncertainty: what will their labour supply be? Should they invest in Britain? Should they make that capital investment in that new product here in the West Midlands and in the UK, or should they actually decide to put it in a European country where they know what's happening? So again, these questions and the uncertainty created by Brexit is definitely having an impact on flows of FDI immediately into the region that we have seen in the last year and a half. With regards to financial services, that's not so dark, again as referenced by Philip. We have some opportunities there with us in relation to people looking at reworking their supply chain footprints. As a lower cost region to London there are opportunities, as well as risks, and then there are wider implications with regard to the uncertainty created over VAT, exports, all of those things. All of these things are making businesses pause, to think actually will they make their investment here in the region. I don't really want to, you know, there are some opportunities coming out of it but it is very difficult and I don't want to play down the risks so we are trying to promote the nascent strengths of the region, the nascent strengths of the combined authority, and I think our strengths in innovation and talent will be the things that will help us combat some of the potential negatives linked to that uncertainty of the Brexit decision. Thank you. Chair Thank you very much. That was very informative. We move onto David Hearne, Birmingham City University and Brexit Studies. David Hearne I'm here on behalf of the Centre for Brexit Studies at Birmingham City University. The Centre was set up just over a year ago under the leadership of Professor Alex de Reuter and essentially the aim of the Centre is to bring together expertise from across the university and, where applicable, from our academic and commercial partners as well outside. Today I would like to speak about one particular project that we've undertaken and I have three real objectives in terms of my talk today: first of all I'd like to introduce and briefly explain some of the work we've done in the project; secondly I would like to demonstrate that it has direct policy relevance, particularly in terms of shared prosperity funding and in terms of the end of EU funding flows; and thirdly I'd like to show that it feeds into and reinforces the importance of a piece of work that our colleagues at City-REDI have introduced today that is discussing the sectors and regional impact of Brexit and how, if anything, our work just reinforces and reiterates how important dealing with that will be. So the centre of our work has essentially been developing a series of regional price levels. Now this sounds quite esoteric and perhaps a little bit boring but the theoretical rationale and underpinning for this is clearly very important because when measuring regional living standards, regional wages, gross disposable household income and indeed gross value added, it's important to take account not just of the amounts in pounds in pence but also how much things cost, the price level. Your standard of living depends as much on your cost of living as it does on your wage. So we've developed a series of consumer price levels based primarily on ONS data. We've brought together a number of data sources and we've tried to use the methodology used by the [Eurostat OECD - 0:41:52], so we've used the [EKS Method] which I would defend as probably the gold standard in international purchasing power parity comparisons. And really what our numbers show is unsurprisingly I suppose that prices are significantly higher in London and the surrounding regions, particularly the South East. We've got lower and upper bands, primarily because how you account for housing costs can differ. So exactly which data source you use to measure different housing costs and the appropriate measure here is rent, both actual rents and imputed rents, in terms of measuring consumer prices of housing. But we can see that regardless of the precise data source used, London is a considerably more expensive place to live than any other part of the UK. And the North in particular comes in much cheaper. The West Midlands is somewhere between the two and I will point out that has quite important ramifications for gross disposable household income. So drawing in fact on the work of Professor McCann, we follow the argument that the direction of travel, the direction of causality if you like, runs from regional to urban rather than the other way round. In other words, the comparative performance of cities in the UK is to a significant extent defined by their sort of performance of the surrounding regions. So again, we've got - I don't know if it's visible on this slide but gross value added per capita is somewhere up here in the case of London and somewhere down here in the case of Yorkshire and what we're essentially arguing is that gross value added per capita is an extremely poor measure to use when allocating regional funding flows. So, one of the most interesting things that comes out of this is that if you look at individual city regions, the West Midlands combined authority area has the lowest disposable household income per capita by a significant margin, by none. IT's around 10% poorer than the second poorest region in the UK, namely South Yorkshire. That has important ramifications in terms of funding because I think that gives you an extremely strong argument if you are looking for a greater share of any future shared prosperity fund. I think that has direct policy relevance. Also there's a very interesting set of arguments to be made by sub-regions within London because although yes, they have relatively high average incomes, they also have very very high price levels so their real incomes look much lower than their nominal counterparts. So I would make the argument that this has direct policy relevance for any attempt to look at regional development funding and that it's important in shaping the nature of regional development funding. In particular we find that South Wales is no worse off than South Yorkshire, so those who remember the court case a few years ago where the - I believe the European Commission was taken to court over ERDF funding in [0:45:09] funding will note that with some interest I think. Moving onto the impact on gross value added, these are very much experimental statistics in their current stage. We're working quite hard on trying to put together the most robust data sources. It's quite difficult to get full purchasing power parity, primarily because it's quite difficult to ascertain figures in terms of looking at the cost of delivering government services in various regions and the cost of gross fixed capital formation. So these figures are subject to change. I think we can have a degree of confidence in our lower band that this effect will not be smaller; this relative price effect will not be smaller in terms of its GVA impact than our lower band suggests, and when you apply these deflators to gross value added productivity specifically, so that's gross value added per hour worked across the government office regions, [0:46:09] sub-regions technically in the UK, these are the figures that we end up with. And again, the impact is fairly predictable I suppose. What we see is that regions in the North experience an uplift in their relative productivity, London and the South East experience a fall. One of the most interesting things that jumps out at me anyway is devolution works. Devolution works. If you look at the figures for Scotland, Scotland actually overtakes the South East in terms of its productivity, in terms of its real productivity levels when adjust for prices. Scotland is a relatively productive part of the UK; its productivity levels jump from below to above the national average. The same is true for Wales. Wales goes from being by far the least productive part of the UK to roughly on a par with its English counterparts; its counterparts in the North of England. So I would argue this is strong evidence that devolution really does work and there's a strong argument to be made for greater levels of devolution, both for regions and for cities in the UK. Finally I would argue that a corollary of this is that in terms of purchasing power adjusted gross value added, the importance of these regions in the North and Midlands have been understated by nominal figures. The impact of that is that if this is true then it reinforces the importance done by the work of City-REDI because it suggests that these regions which are going to be hit particularly hard by Brexit are more important to the overall national wealth than has been shown so far in official data. So I would argue that not only does this have very real ramifications for funding flows for any future shared prosperity fund and for any arguments over devolution, it also has very real ramifications in terms of supporting the work done by our colleagues because it suggests that these regions which have hitherto been argued as being perhaps less important than the city of London for example, are quite the opposite. They make a significant - and particularly when you add up the effect for this region, this region, across the UK you will find that these make a significantly greater proportion of total UK output than official figures suggest. The upshot being that it's really, really important to get this right and on that note, I think I'll finish. Thank you. Chair Thank you very much. Hoping that we still had the full hour I think we still have some time for questions. Still the questions are to be asked into a microphone so I don't know if someone is carrying around one, otherwise I'll try to toss one. Please. Female audience member Good morning. So as we were asked before, I'm going to start with introducing myself. My name is [Violen Mendez - 0:48:57], I am French and I work here in a small company in Birmingham. I have a PhD in Chemistry and I'm working in a Research & Development lab to make some specialist coatings. So we work with people like Rolls Royce and Siemens. So my question first of all is do any of you consider that maybe we shouldn't go through with Brexit? [Laughing] Someone had to ask it! Chair Philip? Philip McCann The reality is these things are an outcome of political processes. [note: the following male audience member seems to interrupt the response] Male audience member Good morning, I'm Ken [0:49:45], I'm an interested bystander but a simple question, to me it makes no sense whatsoever to travel thousands of kilometres when we can travel hundreds to the EU and back again. I used to be an Environmental Services Engineer, designing services in buildings and the carbon footprint was something we kept hearing about. The carbon footprint of travel is ten times more than we necessarily to. It seems to me completely farcical, so I would argue that, you know, it would be a great idea if we didn't leave. Philip McCann Well a couple of things. Obviously in a democratic parliamentary process the outcomes are dependent on the parliamentary system and we don't know how this is going to evolve. We assume Brexit's going to happen but the form of Brexit is the key thing and at the moment, everything is fluid. So we don't know how these things are going to evolve. The point about distance is important. Yes, the carbon footprint of course is an argument that many people have talked about, but actually more generally to do with the structure of trade that we've been working on, one of the arguments is that we're now in a post-geographical trading environment - we've heard these phrases - yet the literature on international trade and economic geography is just overwhelmingly 99.9% against that argument. It simply says that it isn't true. While the cost of distance has fallen in the last decades dramatically through containerisation, GPs systems, low cost airlines, advanced container shipping and so on, enormous improvements in aircraft technology, the point is that the cost of time has increased. I mean people don't want things sitting on a container for months before it's delivered. They don't want things frozen, travelling thousands of miles. They want things fresh. People's preferences have changed so actually there's a huge amount of evidence in international trade that shows that actually ironically, since the world has become cheaper to travel, the cost of distance has actually increased in the last thirty years and there's an enormous amount of distance and it's in every industry. It's in services, people think 'oh, I want things faster'. In manufacturing and engineering, you want things customised very very fast. So the distance argument, actually from an economic geography point of view, distance has actually become bigger and what you see with our simulations that we've already done - again, we've published this already - is that all of the regions in the UK since the millennium have become more integrated with Europe. The only region that hasn't, that's fallen, of course is Greater London because London has become hyper-globalised. It's less dependent on Europe than anywhere else, whereas the rest of the UK regions have become even more integrated in Europe. So the kind of idea that geography is dead, I mean we've heard this before and there's been multiple predictions of this in 1992, the O'Brien council of Presidents' Foreign Advisors on Trade, in 1997 the famous book Francis [0:52:40], the 'Death of Distance'; 2004, 2005, Thomas [0:52:43], 'The World is Flat'. I mean these books are a great read but they're all rubbish. I mean the empirics just say the complete opposite and so we are in a difficult position. If you look at the idea of doing trade deals with other countries, well there are some effects that will come from these things but almost - well, basically all of the evidence shows that they can't compensate for any negative effects of trade and the way to think about it is an economy like China is gigantic but its effects on the UK economy are about the size of the Newcastle city economy. The economy of Newcastle is about the size of - the urban area that Newcastle is - it's about the size of the contribution of the Chinese economy to the UK. Countries like Canada, Australia, they're about the size of places like Leicester, and countries like New Zealand will be about the size of places like Mansfield or Chesterfield. So even a big economy like Canada is really somewhere between Bournemouth and Leicester so, you know, if you imagine you have a free trade deal increases trade by 10%, you're talking about a suburban neighbourhood of Bournemouth; that's the contribution. I mean these are incredibly marginal and all these results come out in the [0:53:53] database. So in international trade these are well known. So the geography argument is really a non-argument, it's a matter of how to respond to it and cope with the structural changes that will come out of the deliberative and democratic processes within the parliament system and so we basically have to wait and see. Chair OK, thank you. One more question? Female audience member Yeah, it follows on from what you were saying about trading components nipping back and forth. There was some Minister on the radio saying 'look at Toyota, they get lots of their stuff from the Far East, they have no problem with not having a trade deal with the EU'. Could you just explain what he was on about and how that compares with what you've been finding in terms of the flitting back and forth of components and bits and pieces and how that would be affected. Philip McCann Well the Toyota [0:54:52] for example, only a small minority of their products come from the Far East. The vast majority, more than 60%, come within the European Union. That's also because they have to comply with the rules of the EU. They have large amounts of local components but the majority are coming - and particularly the higher value added components - are coming from other parts of the EU; that's how they work because they work on what's called 'just-in-time' systems. So a company like Honda for example will have 350 shipments a day. They've got less than half an hour inventory and those shipments are changing every day. What's in each container is changing because the production schedules on the plan, the production line, is changing daily according to orders. So the idea of, you know, for example you can monitor what's inside these shipments via number plate recognition; these are components which are changing every day from all over different parts of Europe. I mean this is just how they work. The problem is, how do you continue to run those systems in a situation where we're coming out of the Customs Union, so what kind of customs partnership can still allow those systems to work, because the way the systems work is because they have zero checks. That's the reality. It's not small, it's zero. It's the only way those systems work. Actually Greg Clark, the Minister for Business, was talking about this on Sunday - I think it was on Andrew Marr - and his points are well made about that. So again, it depends what details come out in the negotiated agreements what actually happens. It's all in the detail and small changes in detail can have enormous changes in terms of the production logic of these organisations. Chair OK, I asked the person in the yellow tie to keep it up for after the break. Male Audience Member Very briefly. Chair All right, very briefly then. Male Audience Member I run a translations company and represent a money transfer service and the economic impacts are huge for me. However, I'm more bothered about the social impact, you know, what's going to happen to Violen's baby? What's the citizenship? You know, where do we stand - these are human lives at stake and are we going to have another Windrush scandal in a few years? Chair Well that's a big point. I think we have to take it from here further on. I will keep this in mind if you don't mind. We are halfway through the day so maybe further on in the day we can get some more answers to Mr Broad's questions which were raised at the beginning. I hope to see you back after the break. I will remember your question. Maybe I can answer it a bit later on; no promises. Let's first of all have a coffee break before the coffee gets too cold. Thank you. [APPLAUSE] Title: Birmingham Session 2 Duration: 50.02 mins (Transcription started at 15.30 as requested) Speakers: Professor van Oort, Erasmus University, Rotterdam Professor David Bailey, Aston University Justin Benson, KPMG Automotive Professor Nigel Driffield, Warwick University **** David Bailey Thank you very much. I was going to talk about automated then I saw that Justin was on the panel and knows far more about it than I do, and Nigel talking about FDI, so I thought oh bugger, what am I going to talk about. So I thought I would talk about the fourth industrial revolution which Nicky spoke about earlier. And what that means for advanced manufacturing, particularly in this region. I'll come back to Brexit at the end because that raises a whole set of industrial policy implications which I would argue overlaps with the sort of policy response we need in terms of Brexit. So I'll very quickly talk about what's called Industry 4.0 - how we need to go beyond that, Brexit, little bit on auto but I won't overlap too much with Justin and sort of policy issues. It's argued that we are entering a fourth industrial revolution, so these ideas that we've got, these Kondratiev Long Waves, stimulated by whole clusters of significant innovation which change the economy and lead to new waves of growth. I don't want an argument about how many waves we've had, which is what always happens when I put up this diagram. But the argument is we're entering a new wave of economic growth linked to a whole set of new technologies. Those are the linking up of 3D printing, AI, robotic, censoring, space technology drones, green and renewables - all sorts of technologies that are linking together to transform modern manufacturing. So a lot of discussion and research on the third or fourth industrial revolution which we're going into. Now in terms of the European definitions of what's called Industry 4.0, it's about these, kind of the cyber physical side of it - AI, the Internet of Things which Nicky referred to, about how factories can be connected together, the use of big data. So this comes back to the idea of smart and flexible factories, factories of the future, about how there can be mass customisation in markets, but it's very much about the sort of technology side of it. Our argument at the Makers Project which is a European funded rice project, is that actually we need to think much broader in terms of the fourth industrial revolution, what it means for industry but also society more broadly. So yes, we've got all those new technologies that are coming - which I can't use properly - all those new technologies that are coming in terms of things like that Internet of Things and AI, but we've also got completely new markets. So as we'll see in a moment, in terms of the transition that will take place, in terms of the auto industry, where at the moment car makers make a car and hope to sell it to you, that will fundamentally change. So in the future car makers will have to shift in to providing a mobility service. You know down the line, ten, fifteen years down the line, we will be summoning driverless taxis on our smartphones. The issue then is where do car makers position themselves in that new value chain that's going to be created? So whole new markets will be devised. We're likely to see as well, much more in the way of personalised and flexible customisation. Already you can go on the web, design a piece of jewellery yourself or with a designer and a jeweller in the Jewellery Quarter, one of the original Marshall's industrial districts, not far from here, will print it out for you using 3D technology. He'll probably - or she - will probably print out two so you can keep one in the safe. You don't need an insurance policy then by the way so the insurance industry will lose out, but you'll be able to co-design and co-create products that are made specifically for you. So they are customised. We're going to see whole new business models. A lot of companies will have to shift into providing a service alongside the manufactured product. We know that Rolls Royce do that already with Power by the Hour. Car companies increasingly will have to do it as well. Sustainability will be sort of writ large through this. And think about 3D printing. Traditional manufacturing techniques take a lump of metal, knock bits off it down to a small component - this is the other way round. So you can really build in sustainability into the process. Big implications for supply chains. If you think that the first time you print that component out the cost of doing it is the same time as the millionth time then economies of scale may not be so significant. We may see the rebirth of small scale manufacturing, which could significantly alter what economies of scale mean in the car industry. I was talking to a company not far from here which makes composite materials that go into cars. They were talking about maybe the economies of scale being in the tens of thousands for cars, rather than the hundreds of thousands. So significant implications. That could mean there are new production spaces, both in terms of how factories are organised, and how clusters are organised as well. So very significant changes coming in the industry. In automotive for example there's a lot of discussion - some of this is from KMPG, so I've copied it from you Justin - things like connected devices, AI, predictive analytics, flexible systems of production, connected factories, so that kind of engineering side of the change that's coming. But we're also seeing a whole load of new technologies. Think about electric cars that are coming - I drove here in one today - a shift towards car sharing in some big cities, much more in the use of lightweight materials, connected cars. The car that I drove in is connected to the internet all the time. I can control various functions from it. One of the cars we've got you can even summon it to come and get you if it's not too far away, so all sorts of interesting technologies coming - digitisation, big data, autonomous driving, much more in the way of collaboration across firms to try and make that happen. Now, why is Brexit relevant for that? Well that requires significant investment. And if we are not seeing the investment in the same scale in the UK car industry that we saw before, which Nicky alluded to, and I don't think the full effects of that have come through yet, we could lose investment in those new technologies and therefore affect the competitiveness of the industry going forward. This is not a very good diagram to see, but it shows how the traditional value chain in the car industry - suppliers, assemblers, which was very vertical - is shifting to all sorts of different sectors linking together, whether it's 3D printing of components - there's even a crazy car company in America called Local Motors where you design the car, they print it out for you. Looks a bit like something out of Whacky Races but that's the sort of technologies that are coming. Electric car charging, new energy sources. Fleet management firms like Uber which really manage the fleet of cars that are available - think when that shifts into driverless cars, you know you will summon a driverless Uber as well as GPS and positioning satellites and all sorts of other technologies, a whole new value chain. So, some of the key issues out of this revolution - one is co-creation. Consumers creating things or designing things with the manufacturer. New ways of consuming or accessing services and products. A servitization that will take place. Manufacturing's still important but offered as part of a service. A fundamental change in some industries in terms of economies of scale. I think there is the possibility of shorter value chains, for the reasons I'm talking about, but also because demand is changing as well. So increasingly we want a personalised product and we want it delivering quickly, so that may mean quite short value chains in some industries. You already see it in fashion, so the Zara effect, whereby Zara source garments from Europe and North Africa because it's quicker to get to market, they don't want something on a ship from China for six weeks because it may be out of fashion, those sorts of arguments. And also rethinking of products and processes from an ecological perspective. A lot of kind of resistance to this - awareness, resistance to change, uncertainty, about how quickly this will move. There is a delusion I think about the inevitable supremacy of services. We are seeing a rebirth of modern manufacturing I think. And Implications for Policy - so just a quick flavour. I'd argue that we need a very kind of clear commitment from the government over the direction of change. We haven't seen that in the car industry recently for example, huge confusion for consumers. We need to think about promoting technology - technology adoption and application, so we've got to think about a policy that joins technology with sectors, with place. So we join up industrial policy in a holistic way. That raises very much the role of regional industrial policy which is exactly the same response we need to be thinking about in terms of Brexit. We need to be thinking much more about skills. It will mean a lot of change in terms of the skills mix that people will need going forward, not only now but throughout people's lives. Now some countries are great at that - Singapore, Scandinavia. We're rubbish at it. We did a great job on dealing with say MG Rover, but we don't keep doing it. We need this commitment to lifelong retraining and skills. Big investment in infrastructure required, supporting forms, so access to technologies that are coming, developing platform sharing so that the technologies can be applied across different sectors, so that they become general purpose technologies. The EU for example is encouraging digital innovation hubs. Are we going to do that when we leave? What are we going to do? All these sorts of questions. What can we do in terms of the global value chain, repositioning it, attracting new elements of it? A lot of the literature I've been looking at recently is about what's called the transitions literature where you break out of a lock in of an existing technology and that new technology merges in niches. What that literature often doesn't get is that they are often emerging in certain places, often supported by local governments. So we've got to put place very central into all of this. Now, coming back to Brexit, I'd argue that actually we've got this huge uncertainty affecting investment and confidence and the willingness of manufacturers to invest which in turn is relevant for these big changes that are coming. I would argue that actually we should be prioritising, as the House of Lords rightly has laid out this week, prioritising access to the single market in order to minimise the transaction costs for manufacturing. We've got to look at issues around skills and access to skills, and there are some opportunities around reassuring, which was touched on earlier in terms of our supply chain. But if we're going to do that, we've got to really go for it. It's got to be a clear policy. So how do we change the tax system to encourage manufacturers to invest in plant and equipment through things like capital allowances? How do we support our exporters better? How do we attract parts of the supply chain that we want? And again, this ultimately comes back to having much more in the way of devolution and a local and regional industrial policy which actually is the place at which we can possibly try and deliver some of this. On that note I'll finish. Thank you. Bit of a ramble but thanks very much. Chair Thank you very much David. So now we move to the private sector, so this is Justin Benson, the Head of Automotive for KPMG in the UK and also he is leading the firm's Brexit response in the industrial manufacturing sector, so please Justin, the floor is yours. Justin Benson So I'm going to focus very much on automotive. I know it's been used as a lot of examples, but there's a lot to think about. And one of the things I talk about a bit is actually how important the automotive industry is to the nation, as a whole, and here are some of the numbers. And it's great, it's a really great news story. It's four percent of GDP, big business, seventy billion, there's over two and a half, nearly two and a half thousand companies in the UK auto sector. There's - well, it's actually probably seventeen or more actually NSC's but the real ones of note are fifteen NSC's - National Sales Companies, so people who sell cars in the UK and eight of them manufacture in the UK. All of them are owned by companies overseas which is really important - we're a big inward investor marketplace. And eight out of the ten F1 teams are based in the UK. So the technology, the research and development, the ability to make new products and develop new cars is incredibly mature in the UK. So it's great isn't it? OK, so what's the problem? Auto investment - I think this might have been mentioned earlier. I'm sorry I wasn't here - but this is the big issue for me. It's OK now, and nothing's changed as of now, and we're all trading really well and we have about eighty percent of everything we make in auto goes overseas which is fantastic, and that's actually protected us quite a bit from the recent downturn in the UK in car sales. But we're well known. We really punch above our weight in the auto sector in the UK. And that's worrying because what - I'll come back to that in a moment. Oh hang on. What that means - sorry - is if you think about new models or new ways of doing things, and particularly new models - our, our - is our automotive industry going to continue to invest in new models going forward? So you've got, I mean classic, you know JLR in Slovakia, you've got JL - Ford are all based around Europe. They make engines in the UK. Toyota make cars here, Nissan make cars here. Do I continue to make the vehicle here? I'll go into that a little bit more detail in a moment. This was interesting I thought to help try and look at it from the two dies of the coin. So the majority of the one point seven million cars produced in the UK contain parts from German suppliers. That's important, obviously, to generate the fact that the goods are moving across the border. And forty four percent of the vehicles fitted with German parts then go out of the UK to other countries. We're a real manufacturing hub - German suppliers located in the UK, so two point seven billon, and you got the, it's the largest exporter of car parts to the UK at four point six billion. I know this is probably, you've heard this before, but if you look at the Bavaria region rather than Germany as a whole, Bavaria, so BMW Daimler for example, you're looking, in the UK, is the second largest market to Bavaria after the United States. It's a hugely important market for the premium car makers, right? But there's just one point I'd like to make outside Brexit is, because Brexit isn't the only problem in a sense for auto manufacturers. David alluded to it just a moment ago. We see three key disrupters. So if you think Brexit as one, the other three are electric vehicles and alternative fuel vehicles et cetera. Mobility as a service and connected and autonomous vehicles. I cannot over estimate the impact that autonomous vehicles will have on our lives and on the industry. It is - you cannot overestimate it. It is going to be huge. The next ten years of change, driven by mobility and the changes up there, will be more so than you've seen in the last sixty years, yeah? So it's quite remarkable some of this and David alluded to the IOT aspects. These are all really important points. So just look at it from a Brexit perspective. So the two key areas is, for me, is model investment and supply chain. So you're going to are cars going to get made here in the first instance and then from a supply chain perspective, can we actually deliver the components and make it work? To give you a flavour for that, this is a very high level view of the new model investment decisions. And if you think about - so two thousand nineteen, two thousand twenty, that lane, that line may move a bit but at the moment we're very much still in sort of April two thousand nineteen, but there's going to be a lot of decisions made post two thousand nineteen. And a number of those decisions need to be made now. And someone else mentioned earlier about the seven year or seven year plus product life of these vehicles. We've had some announcements over the last couple of years but nothing recently, and my view is that's very much by design. They're waiting to see what's going to happen with the EU trade deal before they're going to commit large numbers into the UK market. And it's not really whether we're in or out of Brexit to be honest, they just want t know what the playing field is. If we know what the playing field is we can make a decision. So this is the seven year itch. Now this is the seven year development of a vehicle, very broadly. But if you think of it in terms of looking at your forecasts and looking at how many cars you're going to sell, but they do this outside of the UK. So this is happening in Germany or Japan or the US and then they're saying UK, you've got to bid to make this vehicle. So you'll have seen a lot about the Nissan Qashqai recently for example. They've bid for that in the global market and they then get the investment and then they make the vehicle. If it becomes cost uncompetitive to make the vehicle here then they'll move it, because they're looking at a global market. I'm not saying they will. I have no insight into what they are going to do, I'm just giving you some of the issues and thoughts about what will be going, or what is going through their minds. This is a more closer to home example - you'll be aware of all of this. But something like eighty five percent of the vehicles that Jaguar Land Rover make are made in the UK so they're very much an export market. Eighty percent of their vehicles are exported and something like thirty odd percent of that eighty five percent goes to European Union. So you have to start thinking about what that means. But a lot of the products they bring in to make their vehicles comes from Eastern Europe for example. And again, just to illustrate they're a global company, and they're making cars in China now, in Brazil and very soon in Slovakia. So again, they'll be making choices about where they make new models as well. So from a supply chain risk perspective which is the way that we look at it, we think there are four key areas that need to be thought about. So you've got Customs - I'll give you an example of this in a moment. So if you think of the WTO rules which is the basic, is what we sort of describe as the worst case scenario, so it's thinking about that or thinking about what different scenarios might be, not as worse as that if you like. And then network optimisation, the warehousing logistics, the manufacturing locations I've touched on already, but these are all things that you start to think about if your supply chain is going to change. And if you go back to the point that my supply chain is not only changing because of, potentially because of Brexit but it's already changing because of electric vehicles, then all that twenty five years of investment in diesel and petrol is starting to wane away fast, and I've got to invest in electric vehicles as well. So the strain on the balance sheets becomes even higher. And if you really want to make an electric vehicle, the best place to make it is China, because they have all the technology and they have all the batteries and lots of other things, or you'd at least consider China as a place to make it. I'm not advising you to do that, I'm not advising auto companies to do it, but you need to think in terms of the globe, you know when you're thinking about making a car. Distressed supply chain probably speaks for itself but it's been alluded to already. We see a number of - if you've got a supplier for example that's quite leveraged, has got a lot of debt on its balance sheet and it's making a little bit of extra money that is investing a bit in the business and the future, if that little bit of profit disappears and all of a sudden they're finding it difficult to pay off the interest on the debt, then it becomes difficult to operate, and so ergo, supplies could be straining in some areas if they're not getting product. I mean we actually work with the OEMs and we have some standard agreements where they will call us if they see a problem with one of their suppliers. There's lots of early warning signs. And I'd say nine times out of ten we can, we turn things around, we help the OEM to get the supplier relationship right and we help the supplier a lot to get things right for them, for the longer term. But we see there could be a lot more of that going on. And then cash and working capital - I'll come back to that but that's basically have I got the same amount of cash post Brexit that I have now. And there are reasons why you won't. So this is - that's supposed to be a picture of the United Kingdom. The big bubbles at the top, bottom right hand corner there are the goods moving around the Channel Tunnel and Dover. On average through Channel Tunnel and Dover, a lorry goes through those two ports every two minutes. We reckon if that doubles to four minutes, so just four minutes for a lorry to get through, you'll have a queue about twenty kilometres up the M20. So it's really - now will that last for weeks, months, years? Probably not. How do you manage it? But thinking about that delay and how you do it, and I'll explain why, even why again, why that's very important. Just, this is our view of what we think is going to happen. You're going to get an extra - see at the moment you could, you're not really talking about exports. When you're sending goods to the European Union they're not really exports. We call them exports because they're going out of the UK but post Brexit they become exports. So you'll have a lot more people actually become exporters by definition, because at the moment from a tax and from a trading perspective they're not really exporters but they will become exporters, hence there's going to be a lot more. So you think about the declarations that will have to increase. We believe it's about four billion admin costs. That is a little bit of a finger in - sorry? Male audience member [0:36:58] Justin Benson Sorry? Male audience member [0:37:00] Justin Benson Yes, because you're talking, it's all the extra, well it's the extra staff and, to cope with the extra - yeah. See if I was in, if I was living in Kent and I had some spare cash, I'd probably invest in car parks, recruitment agencies and hotels, but that's just me. I may slightly - I don't mean to be facetious but it's an important point and these are things that we want government to be thinking about. They are to a degree but they keep coming up with answers which have credence but they lack detail, and this is partly because we still don't know what the European Union Trade Agreement is going to be. So this is a case study. So if you remember earlier I mentioned WTO rules, this is the hit on this particular company - sixty six million, that their customs costs would increase by sixty six million. That's per month. That's something else - I'll do that - so that's, that was one example. This is another example. This is a company that manufactures mostly overseas. It does have some manufacturing facilities in the UK but most of it's done in Germany and other parts of the European Union. And they export a huge number of finished product into the UK. Now one of their issues - and it will be for a lot of them - is tax, OK? Customs tax but VAT. So going back to the cashflow point, if you've got to pay your VAT, at the point of exit, number one will you get it paid back, if you can claim it back? And number two, if you can, how long does it take you to get paid? At the moment it's a mathematical exercise, one just cuts out the other. In this case you're talking about twenty percent of whatever it is that you're saying over, and you're talking about billions of pounds. Do I get it paid back? But even if I don't, that's four months probably without cash that I have now. So it's important to think about those cash implications as well. These are real world examples and hopefully I've taken this down to a level of details that's hitting home a little bit. That's my final slide. Just before I go onto, well, I'll just do the - this is a famous slide of GKN. It's basically showing - GKN make drive shafts amongst other things but the product is made and finished and turned and all sorts of different things done in different countries. They're done in different countries and then come together in the UK or in some cases - and I think in the case of the Mini - the product goes across the border ten times, because it has a process in the UK, then it goes to Germany for finishing, comes back to the UK and so on. And then finally when it ends, you always have to remember that when it goes into the car, the car then gets exported, probably back to Germany. So it's a very integrated supply chain, really important to understand that. So I'll just finish off, because I thought the question about will Brexit actually happen is worth, just, very, my view on that, very, very quickly. If you, if I was, if there was another referendum - if - I have no insight I'm afraid. But if there was another referendum, I'd probably vote to stay out because I believe in the democratic process and I think that's really important from our perspective. There's a real need now to actually to deal with this. But there's a big difference between the way the UK look at Brexit and the way the rest of Europe looks at it. Up until February this year, all my colleagues in Europe were basically calling us all sorts of names and thought we were idiots. And they said, the second thing they said was "It ain't going to happen". And we said "Well it is". We've been convincing boards based in Europe for the last twelve months that Brexit will happen. And it will. I mean the point made earlier about what kind of Brexit will it be - if you, if you then take that as, so the Europeans are then - what changed about six months ago was the Transition Agreement. Bizarrely, we sort of all went "Oh, Transition Agreement. Thank goodness for that". The Germans in particular looked at it and went "Bloody hell, they're actually going to do it" and that's the important thing. And that's what we have to get our head round, because we've got all these problems to solve. And they're not insolvable and there's lots of opportunity there. All the new technologies, all the opportunities to build new businesses and build new ideas into the way that you do things are all there. We just need to be working on them now. Thank you. Thank you. Chair Well thank you very much Justin. So now last but not least, Professor Nigel Driffield. He's a Professor of International Business at Warwick Business School and he's going to talk about FDI. Nigel Driffield Yeah, when I realised I was on eighth, I thought well I'll do some slides but everything's going to be said. So then I thought what I'll do is, I'll talk about a piece of work I'd done with, for, either - Nicky. Then I saw Nicky was on the programme so I'm stuffed. I am going to talk largely about FDI. It might even have some vague relevance to what's behind me on the slides. I'm going to pick up actually on first on where Justin finished. I have done - I counted up - a talk, basically the same talk, twenty eight times, over the last, over the last year, two years, on why inward investment is going to fall post Brexit, OK? I am not going to do that today. If you really want to see it it's even on YouTube. Someone recorded it for posterity. I'm not particularly even interested in debating why it's going to fall, it just is. You've heard it all today. What was, however, interesting, is the last time I did that talk was to a collection of parliamentarians. There's this body academics will be familiar with called the Industry Parliamentary Trust, that they get collections of parliamentarians together. It's quite interesting. You know, you've got like arch remainers like Lord Hannay and Lord Tebbit and Sammy Wilson all in the same room talking to them about Brexit, it's quite an interesting proposal. And I kind of said OK, we all know foreign investment's going to fall. This is what I think we can do about it. And one particular parliamentarian went "What?" And I said "Well it's kind of generally accepted for all the reasons you've heard in the last two hours, inward investment is going to fall post Brexit." And this is somebody who earns their living by being voted for, went "Nobody told us this". What do you mean nobody told you this? Where've you been? You know, you been living in a cave for the last three years? And it was interesting that the debate or the discussion that I was really meant to facilitate stopped being about what I wanted to talk about which is what the hell are we going to do about it now, kind of picking up from where you left off, and they just rehearsed all of the crap that we've been talking about for the last two years in terms of yes it will, not it won't, why, whatever. And I found that really depressing if I'm honest, that that was the state of, if you like - I mean this is not a, they're not necessarily a cross section of parliamentarians, they're people who can be bothered to come along and listen. But I found that really quite depressing. So, on that, on that note, what can we do about this now? Well, there are essentially two reasons why we as an economy or a society get terribly interested in foreign investment, OK? So the reason - I'm going to put words in Nicky's mouth - but the main reason why the growth company are interested in foreign investment is jobs. Yeah? It's creating employment. OK? More generally, the reason that national policymakers get terribly interested in foreign investment is either because it's a short term solution to a sort of balance of payments problem, or alternatively because it's going to bring in new technology and it's linked to innovation and whatever. So my sort of mantra - and anyone who's had the misfortunate to read anything I've written over the last kind of twenty years - is really about understanding what it is you're going to get, OK? So if you are seeking to generate foreign investment in particular activities, particular sectors, whatever it is, then understand what it is you want, understand what it is you want out of it, which is essentially the piece of work I did with Nicky kind of trying to help put that in a local context. So there's a horrible slide. But essentially what that is is, if you look at the sort of, if you look at the sort of vertical index, that is just basically the share of GVA of a sector in the local economy, and the horizontal index is its average growth rate, and the size of the bubble is the amount of inward investment that that sector has attracted. So you can immediately see why we've all been talking about the automatic sector for the last two hours, because there is it, over there - oh this doesn't work. Excuse me. There it is, over there on the right - sorry I'm dyslexic. Things like that are a challenge. There it is over there, but you can see all of the others. And then another one that kind of sticks out is food products et cetera, you know, big bubble but in a very different place in the diagram in terms of - I'm popular aren't I? You know, in very different place in the diagram in terms of the growth rates and so on and so on. So it's about OK, it's about understanding what it is we're going to do. Now, why would Nicky like to chase inward investment in something like food? Well that's jobs yeah? That's the sort of sector that's quite labour intensive. It's the sort of sector that will generate jobs for people who are already here and are essentially kind of under employed or unemployed or looking to trade up from a sort of minimum wage job into something slightly better. Why would you be interested in something like arts and entertainment? Well that's a whole different sector, you know. There's been lots of discussion today by the way on Birmingham as the region - I just feel the need to point out as I live in Coventry, the West Midlands is not just Birmingham. Coventry is the City of Culture. Yeah, we all know that. But you know so there are other sorts of sectors where you chase inward investment for different reasons, OK? So, what we kind of did - and this is a sort of quick run through - is basically trying to match up where you've got sectors which generate lots of jobs, which is essentially generating jobs for people who are here, compared with sectors which might bring in new technology, but most of those sectors, as anyone - Ann sat here at the front - anyone who works locally will tell you, a lot of the high tech sectors are already facing huge skill shortages. OK? So it's all well and good thinking right, well we're going to go for loads of sort of inward investment in something like - there we go - in something like computer electronics, whatever, it all sounds great, new technology coming in. Those sectors, as it stands, cannot find people to come and work for them with the right skills. So they need some form of immigration even if it's - sorry - even if it's within UK immigration. Sorry, I teach MBAs, I'm used to waving my hands around. So, and then you, so, so you've sort of got this, you've got this tension essentially, and so what that is is that's then a sort of, an attempt to put these things together that you can think about certain sectors that will generate productivity growth, you can think about certain sectors that will generate employment growth. And then the colour of the coding really is where they sit in terms of skill shortages that already exist. OK? Now why we focus on advanced manufacturing? Well advanced manufacturing is almost seen as the sweet spot between those two things, that it brings in new technology but it's also employs large numbers of people, so that all sounds great. But talk to anybody who works in HR in automotive round here and they'll already tell you when they expand they hire from their supply chain. I just leave that there. OK? So, that's kind of where we are in terms of bringing all this together. That brings me back on then to the labour market. There's been an awful lot of talk today so far about competitiveness and about capital. What about people? Yeah? An awful lot of firms in the labour intensive sector have got used to solving their skills problems with immigration, bringing people from different parts of Europe, whatever. We've basically made that harder. To quote a company I was talking to not very long ago, they said "It turns out that our Eastern European workers are not all that happy we voted out". It turns out, yeah? So we've heard a lot about how difficult it is to move, to move capital and to move goods around. We've also made it harder in terms of employing people, you know. I'm not telling tales out of school here but companies will now tell you they cannot get visas for non-EU workers at the moment because the NHS is taking them all, OK? And yet we also hear that we can't employ Indian doctors because there aren't enough visas. OK? I'm not knocking the NHS but the government is basically taking all the visas that the firms would like to use to bring in skilled people to fill all of those gaps. OK? And that is where we are with the current insanity of the moment. OK, so, very briefly - I'm probably out of time - what can we do about all of this? This bill's from the previous two speakers. As somebody before - don't know whether it was you. Somebody talked about devolution. Devolution is the solution to this. You know, devolution the one solution. I am, I am sold on this. I was, I was really sceptical about devolution but actually if we're going to do this, we need to understand what the blockages are locally. Is it skills? Is it transport? Is it access to finance? Is it innovation? Is it we need to, we need more hire skills in terms of commercialisation. What is it? That is a local problem. We cannot think of that as a national problem that the government is going to fix for us. That has to be devolved to the local economy and that has to be fixed in partnership between, to be blunt, people like Andy Street and also LEPs, CBI, so on and so on. We have to fix that together, we have to fix what activities - I'm not necessarily going to say sectors - but what activities we are going to be good at. Let's build on what, the analysis that Frank's done in terms of where we sit, where we are competitive now, what can we do about this and how can the region then develop that. This has to be done at a local level. Firms then, if they want accountability for this, whether it's spending the apprenticeship levy, whatever it is, if firms are going to be made accountable, then this has to be solved near them. Firms have to have a voice. And if it's vertical policy from Whitehall it's not going to happen even when the whole of Whitehall has stopped, stopped worrying about Brexit. OK? And that's it from me. Chair Well thank you very much. I'm the worst timekeeper ever. But I think I'm going to allow for two questions. So anyone as a question? Female Audience Member Hello, my name's Jane Trowbridge. I work as an Information Assistant at the University of Birmingham Library. I've sat and listened to all of this, I've done nothing but, two years, but look at how bad the impact of Brexit is going to be on this country. I'd just really like to know why the business community aren't standing up and saying more loudly that this is a bad idea. And I know that you've said oh it's the democratic process but there's so much evidence that the EU referendum was really deeply flawed and today the Electoral Commission have fined Leave EU for overspending and for breaking the rules on campaigning. So there's so much information that what was sold to the people, was not what they're going to get. I don't understand why the business community aren't standing up and saying "We really need to look at this again" because it's just madness. I mean it's, it's really, it's, I'm really pleased that people are more interested in the process of running this country and about where the power lies and where the investment has failed, so much of our country, but it's brilliant that people want change, but this is the worst change possible. So why aren't - because you just need people to stand up and say "This is a really bad idea". Justin Benson Yeah, there's a bit of historic reason for that. If you go back to just before the referendum, businesses were encouraged to communicate with their workforces, which they did, most of them did, and were doing it in a positive way. So if I give you probably the worst example, there's a US company based here but with a German, the European Head Office is in Germany, and a - the fact it's German has nothing to do with, nothing to do with it at all really, it's just that it's a European base. But the European Chief Executive wrote to all the employees in the UK saying the reasons why they should be voting to remain which he did, and then obviously we voted out. But he then wrote, immediately after the referendum, he wrote a note to everybody in the UK saying how disappointed he was. Now that's the worst example. But the point was, is that when a lot of businesses had asked their employees to sort of do the right thing if you like and try to get them to understand the impact that coming out would have on their business and potentially their jobs, it didn't go down very well. And so immediately after the referendum, there was a lot of, if you like, licking of wounds and just thinking hang on a minute, we've got to think about this communication, and the fact that, there was all the political stuff you know, some people are more involved and what have you, but there was the realisation that there was a bigger chunk of the population that was disaffected than not and so on and so on and so forth. So business had to really think carefully then about how it communicated with its workforce. And for a time it was hang on, look, you're the politicians, they voted out, you sort this out and we'll just have to follow a little bit. But more recently, I have to say, there's been a lot more activity. You may not see it in the press all the time, you may not see it around, but there is a lot of - well probably the best example, I was talking to a chap earlier about it, that was - Greg Clark on the Andrew Marr Show, when he was about some specifics, a bit like today, he was talking about specific reasons why it was going to have an effect on jobs, an effect on automotive, aerospace, manufacturing. And that really hit home because it created a bit of a political furore because there was a lot of people in the Conservative Party said it was Project Fear again and really it's not, it's trying to state the facts. And there's a bit more of that now coming through in the discussions in the background. But I would hope you'd see more of it now in the next few months because we really need to have, I mean the Customs Bill is going through parliament at the moment, so if you keep an eye on that, that could have a profound effect. I won't tell you that I've got ten pounds on another general election this year, so I'll move on. Chair Thank you very much. Please. Thank you. Male Audience Member Thanks for a really fascinating session. I enjoyed it tremendously. A theme that's come up on several occasions in this panel and on a previous panel, it was sort of the note on which you ended really, is about devolution as part of the solution to problems that are either caused by or unveiled by Brexit. One of the things I do is public attitudes work. And one of the most striking findings that I've seen in, over quite a period of time, but it's not getting any better, is that people across the UK, people in England, across England, are very sceptical about Westminster. If you ask people questions you know, do politicians at Westminster care about people like me, or do politicians at Westminster care about the place where I live, you get maybe one in five at a maximum saying that they do and it's usually around one in ten. And that's true of people who voted leave, at least as much as it's true of people who voted remain. Indeed, it's probably the other way round. So if leavers don't like Brussels and the EU, it's not clear that taking back control for them means returning law making to a Westminster that they don't trust. Having said that, the processes of devolution the UK, going back actually to the nineteen twenties, when you had a form of devolution in Northern Ireland when partition happened, but certainly including the devolution processes to Scotland and Wales, have been, the polite word that's always used is asymmetrical, in other words there are different solutions for the different non-English parts of the UK. And I live and work in Wales where the period since devolution has essentially been one long dysfunctional argument about the constitutional arrangements. Because the initial model of devolution was a sort of local government writ large model and it's been changed repeatedly since then, and that change is ongoing and was happening immediately before Brexit and is continuing after Brexit. If you look at what devolution means in England, again it means different things in different places on different scales. It seems to me that over the last number of years we've seen education policies become taken out of local areas and more centralised, and devolution seems to focus on transport which makes some kind of sense. But also then giving more local autonomy to say the NHS which has been a more centralised policy. If I was thinking about local economic development I would pick local control of education over local control of health. And so I worry that there's a, you know if devolution is the solution, we're getting an asymmetrical, confused, opaque form of devolution which may actually damage the credibility of devolution as a solution to the kinds of issues and problems that we've been discussing today. It's more a statement, but I guess I'm asking you to reflect on that. David Bailey Yeah I would very much agree with that. What we've seen in terms of devolution under the coalition government and more recently is very much a dog's breakfast I think in terms of the creating the local enterprise partnerships, the people involved in them very good meaning, done a lot of good work but locally we've got LEPs which do not reflect functional economic geography. They weren't about the economics, they were whatever political deals could be stitched up locally. So it was a bottom up process which was very, very chaotic. The question of command authority goes some way to try and rectify that and get a critical scale back into some sort of regional scale locally which makes a lot more sense in terms of doing economic policy, but you're absolutely right. And I think one of the outcomes of Phil's book that looked at these sort of big regional inequalities in the UK, is that we have forms of devolution which are small scale, fragmented, often the sort of poorest form of decentralisation we can think of in terms of the big challenges that we face in terms of inequalities across the country. Increasingly I have become much more radical in my views on this and I think the only way we're going to start to tackle some of these things is a proper federal system, where we, on a proper regional scale, of big enough scope to do industrial policy, we devolve taxation, finance, whole areas of decision making down to a regional scale in order to try and tackle some of these problems. And you're right as well, in the sense we've seen a fragmented and patchwork form of devolution. After what we've seen we still have by a very, very long way, the most centralised state in Western Europe, so it's just tinkering at the edges really. And the forms of devolution we've seen, they're not going to be game changers. Nigel Driffield Do you want me to say something or do you want to move on? Chair [1:04:01] Nigel Driffield No I mean, I'm not, I'm not a political scientist. I come at this from the perspective of working with the combined authority, being the Deputy Chair of the Productivity & Skills Commission locally, OK? Where we are trying to figure out, not surprisingly, how we're going to improve productivity and skills, OK? So there's an awful lot of thinking around different sectors. There's, one of the sector leads was here before and one of, so you take, you take an issue like how are we going to support a particular supply chain? The firms know where the blockages are and as often as not those blockages come down to skills. And then skills, so that we know locally what the issues are and then the skills policy is a vertical thing that resides in Westminster that says we're going to do x, y and z. And that x, y and z doesn't then map onto all the other evidence locally. And so I am not, it's not that I'm not interested in the political outcomes of this but that is how I see devolution having to work. It has to, the key policies that can drive Dave's industrial strategy have to occur locally. Now how far we go with that in terms of tax raising powers and whatever I leave to people who are more interested in political science than me but I'm looking at it from a, if you like from a productivity and skills perspective. Chair Well thank you very much. I think we'll have to stop here because we go to the policy debate session. If there are questions they can be asked later and if the presenters are sitting in the audience they, feel free to answer the questions. Thank you very much for all the panellists. Has been great this session and let's move to the next one. END OF RECORDING Title: Birmingham Session 3 Duration: 50.22 mins (from 1.13 mins onwards) Speakers: Lloyd Broad, Birmingham City Council Professor Simon Collinson, City-REDI - University of Birmingham Professor Paul Forrest, West Midlands Economic Forum Professor Raquel Ortega-Argiles, City-REDI, University of Birmingham **** [Transcription started at 1.15 mins as requested] Lloyd Broad Lucky me, I get two bites of the cherry, but I'm mindful that you've had a lot of talking at you today so I think with the time we have left I'll be pretty - I won't be 10 minutes, I'll be pretty brief and leave a couple of hooks that I think are being picked up at various points during today that I think lead to a proper discussion in debate in terms of the real policy challenges. So I've got five and I'll literally name with a small comment on them. One, policy challenges is post-Brexit funding policy. Cities like Birmingham have accessed in the last 25 years over a billion pounds worth of funding that's had huge investments in this city from both business support, physical infrastructure support, employment and skills support. Once that is lost, what replaces it, how is it replaced and how are we enabled to use it to best effect? Funding policy is critical. The second is inclusive growth. I talked earlier this morning about those that have been left behind, I talked about cohesion and democracy, rebuilding bridges with people. There's not been an awful lot of talk today about people, but as a local authority it's critical to us and I think if we want a policy debate, ask the question 'why this country's had no neighbourhood policy in the last 10 years?' and we have so many deprived neighbourhoods, worklessness, poverty. There's a question there to be asked around policies that can tackle inclusive growth. The third, which I think everyone's touched upon today is skills, talent and productivity, but again it's about people. What can we do about employment and skills and making sure that the impact on all of those things discussed today, again, those impacts on people and the need that we have for higher level skills leading to better productivity. The fourth is about maintaining global competitiveness as a city. I won't repeat all the things that Nicky said about investment but city attractiveness, making Birmingham a place where people want to invest, work, live, play, critically important to the future post-Brexit. So that's another challenge. And last but not least it's about ongoing access to knowledge, cooperation and driving innovation. It's linked to all the things above about funding for it, about the skills and talent linked to it, but I think - and what I said earlier about the ability for cities to share knowledge, best practice, cooperate, on all key challenges that affect everybody across Europe, including those in our cities, is critical. So policy, inclusive growth, skills, global competitiveness and investment, and knowledge. Happy to have a discussion about any of those things through a more open discussion. Simon Collinson Short and sweet. So, I think we'll all be short and sweet and just try and save some time for interaction in the audience. Thanks very much. So, I think Brexit for me is another reminder that we don't particularly live in a wholly rational world. Individual decisions, group decisions, are made on the basis of much more than economic rationality and as academics we tend to gravitate towards economic rationality as one explanation for behaviour, and people don't follow those rules and I think this sort of decision, but also the process that we're seeing government go through since then, is based on a huge amount of superficial logic, some political chaos and in-fighting that is taking us round in circles. However, I'm going to get a bit more positive about where we're at a little later on in what I'm going to say and I think the first really positive thing to say about today is that we are starting to see some research emerge that brings evidence to bear on the debate. The debate so far has been pretty free of good evidence and some may say this evidence has come too late because we've taken a vote. I don't believe that. Brexit is not a binary occurrence. Brexit is a process and a form of agreements that we get across a whole range of areas in the next year is going to be critical to how we fare as a nation. So it's not too late. There are three reasons we need this evidence. First of all to inform the public and that's a really difficult thing when the public is actually quite cynical at the moment for various reasons about experts and expertise. Secondly to steer businesses and business managers, but I have to say that large firms and the consulting firms - including KPMG who we've heard from today - are pretty much on top of some of this because they have a range of mechanisms and ample resources to invest in what the hell they're going to do, how do they respond as organisations to this? But I think thirdly where this evidence can really play to enhance our ability to adapt is in policy and policy makers don't have the resources, they don't have the time to get into sophisticated complex understanding of what's going on. I think they need this kind of research to lay out the options and the trade-offs that are important around the Brexit occurrence. So I'm going to focus on policy because this is a session on policy and Lloyd has laid out some of the challenges and I'm going to come on and I'll finish in a minute with four key challenges that I see. But for the regional authorities and particularly the Mayor's Office, the Combined West Midlands Authority, for the LEPs, for the Chamber of Commerce and others, there are existing challenges that we are working on and have been working on pre-Brexit - and Brexit adds a layer of complexity to those existing challenges. One is the need to maintain growth in a region that has underperformed historically and is locked in with a set of constraints, skills infrastructure, our regional positioning and so on, that we've been working to step out and step around from for quite a long time around that need to maintain growth and need to develop a coherent industrial strategy that is right for the region. What is not just our current competitive advantage, and Frank's insightful research I think adds real value to an understanding of our relative competitive advantage, but what are our future potential competitive advantages given the changes we've heard about today, and what are the distinctive regional constraints on growth that we have to again overcome if we're going to move quicker than other regions? So the first thing is the growth agenda itself. We've been working on this pre-Brexit and it still is top of the agenda. Secondly, inclusive growth. This is not just a PR exercise, regionally or nationally. I genuinely believe that at some point, better economic performance becomes completely irrelevant if unequal distribution leads to social and political challenges that overwhelm a region or a country. There is no point in talking about performance and productivity and profit if effectively social disharmony and the political backlash that creates, really undermines everything you do as a country. So we have to focus genuinely on the improvement in alleviating the inequal distribution of wealth and the inequality in the access to opportunity and jobs, again regionally and nationally. And thirdly, it's been mentioned but I think this is a key one and it's part of the four I'm going to come up with in a second around policy change, we have to win a greater level of devolved resources and power to actually configure an industrial strategy and an inclusive growth strategy that is right for the region. Let's go back to the research then to key up the four challenges and ideas I have for policy. Phil McCann and Raquel's research is truly insightful because it gives us an idea based on the added value in our exports and our embeddedness as a region, as a country, in a number of hugely complex global value chains and it shows that we have as a region, a massive regional exposure to any increase in the constraints to trade with Europe. So in his words, in Phil's words, data shows how much different regions need to adapt to adjust to the impact of different Brexit scenarios and this region has one of the biggest challenges amongst many. Now the key word for me here is 'adaptability'. People talk about resilience. I tend to look at adaptability and agility and there is a massive need for us to understand how adaptable we can be regionally and what are the challenges and the constraints on shifting, transforming, transitioning the regional economy to take account of these new threats and opportunities. So I've got four particular issues because I think managers are coping with this and organisations that are private sector driven, have either resilience or they die. They either continue to make profits or they fall out of the market. Public sector organisations and regions as a whole don't, so we need to understand how we can help policy makers adapt to this. So the first thing I'd say is that the trend data and the scenarios we've seen today are based on the past. Actually, this region is on a roll. This region is doing phenomenally well. There are new trends and new changes that in fact are bucking some of our history, including most importantly, a real increase in foreign direct investment and investment from the rest of the UK into the Birmingham region. We've got growth in jobs, we've got some increase in productivity, we've got a high business birth rate, but we've also got a high business death rate which we've got to cope with. But actually, some of those trends suggest that the past is not as good an indicator of the future of the region as we might see from some of the data we've seen. So that's the first thing, we need to not just build on the past, we need to think about the future to negate some of the negative impacts of Brexit that we've seen today. So the second point I'd make to policy is then you've got to see what you can be good at, not just what you used to be good at or what actually are the constraints that are holding you into a particular way of doing things in the past. So we've got to focus much more coherently on high value, high productivity jobs, and to do that we've got to spot which are the good firms in the region that innovate effectively and draw from the regional endowments and draw their innovative capability from what the region offers them, because those firms will do two things for us. They'll continue to innovate therefore they'll adapt, therefore they'll adapt round the costs that might be increased from Brexit, they'll adapt round the skills constraints that we know the region is faced with, and they'll adapt round other constraints that we know are regional because they're innovative and they're fast-moving firms. We need to refocus public policy efforts to understand who those firms are and actually create better conditions for firms to innovate within the region. The minute you do that you retain the best firms, you help them innovate, but you also attract innovative firms from other parts of the country and other parts of the world. So enhancing our regional capacity to innovate by supporting firms that innovate well I think is a key signal to what policy makers should be doing. The third lesson from this, and it really stems exactly from that firm focus, is that we need to better understand how firms are going to react to Brexit. We've talked a lot today about firms. Actually I've sat in a lot of rooms with policy makers, including the Mayor's Office, including the LEPs and others, and there is a real gap in understanding about what firms strategies are revolving [sic] in response to Brexit. Now as David knows, and we've also heard from Justin Benson from KPMG on automotive, if JLR decides to move significant investments out of the region, or into the region as a response to the tipping points that Brexit brings, it will blow away a whole range of minor interventions that the government is talking about, from training, to start-ups, to spin-outs, to setting up roundabouts to improve transport connectivity, so on and so forth. The behaviour of firms is absolutely critical. Policy makers are not understanding enough about how firms are going to react and they are not integrating and understanding of private sector strategies into their regional policy and their industrial strategies. So we need to understand what they're going to do and we need to maintain some level of insights as we configure policies which are devoting quite small amounts of resources to nudging the regional economy. So finally my last point here is that, you know, again we've not discussed this, it came up a little bit at the end under a few comments that we've seen. Regional governance structures vary immensely across the whole of the country. We happen to be in a situation where we've got quite a good one. We've, I suggest, possibly temporarily but certainly historically, we're in a situation where we've got a high level of coherence relative to other regions between the actions of LEPs, between what businesses are wanting to do and trying to do, between the Chamber of Commerce and within a combined authority that has a Conservative Mayor, that has great links with Westminster and we are being listened to as a pilot region for industrial strategies by [0:14:59] Treasury. That coherence is incredibly fragile, yet it is absolutely essential to do all of the things I've talked about. If you want to configure regional industrial strategy, if you want to get joined up behaviour and you want to work supporting the firms, solving skills, taking some control over education, improving infrastructure, you've got to get more devolved power and more devolved resources, but you've got to have political coherence to do that. And we're in a situation where we have it. If it disappears and we go back to in-fighting, political lobbying within the region, our Treasury [0:15:39] Westminster will be the first turn round and say 'you are not competent to take on resources and take on responsibility for growing your region' and that makes me a bit worried. That might sound a bit negative. The point I'm making is the place is on a roll, the region's doing really well. I think we have the raw materials to side-step, cope with, adapt to, many of the challenges that come with Brexit but we need to maintain the current momentum to do that. I'll stop there. Thanks. Paul Forrest Thank you. I don't know if the City Council knows something that we don't know, but the Union Jack flag's upside down at the minute which is a sign of distress, so maybe they've got better knowledge than us! The main thing - just a few comments - is I don't think we can reverse Brexit. Even if we wanted to reverse it, I don't think the European Union or the Commission would be too enamoured with it and I think once you've triggered Article 50 and we're no longer part of the European budget process for the next budget cycle, we'd have to trigger Article 49 of the Treaty of Lisbon, which would mean we would have to join the Euro, if it still exists in a few years' time, and we wouldn't get the rebate that we currently enjoy. So I don't think it's possible to go back to where we were before the referendum. I think one of the things to point out with the West Midlands, it wasn't just the 'left behind' that voted to Remain, but virtually the whole region by a substantial majorities, with the exception perhaps of Birmingham where it was a more narrow majority, apart from Warwick who voted to Leave. I think one of the things is the assumption is that we've benefited from membership of the European Union. In political terms certainly we haven't had to put khaki on in the last 40 or 50 years, which is a positive thing, but actually in terms of economic performance, if you measure GDP per capita in Britain as a proportion of US GDP per capita over the last 60 years, it's remained at about 75-70%, which suggest quite terrifyingly that the British political establishment failed to take advantage to transform the economy by its membership of the European Union and therefore the same government structure is expected to lead us on the uplands of Brexit and therefore we need a fundamental reassessment of how we structure our government's response to the world. The other thing to point out is the West Midlands wasn't out of step with Europe. Quite a lot of the European population isn't enamoured with the European Commission and the way things are going. If you look at the French presidential elections in the first round, 48% of the vote went to candidates that wanted to Leave, or were critical of the European Union. In Italy we're about to get a very strange government that is also critical about the Euro and perhaps wants to Leave and there are some very strange things happening with regard to the rule of Law in Central Europe and parts of Eastern Germany. So I think there is a fundamental disconnect with a wider population than the European Commission and there are some fairly big problems there. One of the big problems we have as economists is for the last couple of years economists have been telling people who stupid they were in voting this way rather than coming up with a policy response on how we actually deal with a fairly major political problem and I think this project to actually develop a database on actually trying to understand what the regions are doing, is actually really fundamental and that's one of the big problems we have about looking at the English regions in particular, is we don't have a really accurate database that actually tells you what's really going on within our regions. I think another problem is that if we'd remained within the European Union, or we leave the European Union, the problems confronted in the West Midlands would have been the same and that's problems in terms of connectivity and infrastructure, including skills, and we need to look at why there's not just an asymmetric regional devolution, there's a massive asymmetry in the way fiscal allocation takes place in this country. If you look at London with a population of 8.2 million compared to the Midland's, East and West, of 10.3 million, the difference in transport capital infrastructure spending, I think it's approximately about £13bn over the last five or six years. I would like to find the economist that can tell me that spending £32bn on Crossrail 2 is going to produce a greater GVA uplift than spending £50m on electrifying the Midland Mainline. There's some big problems in the prior assumptions that we make when we look at the regions, so I do think we need to look at - perhaps maybe the West Midlands isn't in a huge fiscal deficit with the National Exchequer, particularly when HMRC itself says it's very difficult to calculate the regional flows. If you use the Manchester model for calculating regional fiscal flows, it looks like we're in a much stronger position and we should be arguing for a much greater devolution of fiscal expenditure. In terms of infrastructure we also need to look at quite a lot of things such as internet sovereignty. A lot has been made about moving to manufacturing 4.0 but we don't have internet sovereignty. If we're going to have driverless cars you're going to have to use the American GPS system. What happens if you get a fairly right-wing trade protectionist American President in place and it stops you having free access to GPS? We're already having problems that we're getting kicked out of the Galileo Project, which is one of the key things that the European Union was doing to look at greater internet sovereignty, so we do need to - I think what Brexit will do is it's one of many problems. I mean there is a problem with electric cars. The government seems to be advocating this as a pollution free solution but according to the Swedish Environmental Agency, the impact of making, constructing and using an electric car for seven years is the same as using your petrol car for 7 years and the emissions are probably worse with an electric car. Plus we haven't built any power stations recently so if there's a fluctuation in the National Grid when it's half-time in an FA Cup Final, God knows what it's going to do when we have to build all this infrastructure to power everybody's electric cars. So I think the problems as been highlighted today are huge, but as was also said, they're not insurmountable provided we have the right policy responses. Chair Well thank you very much. Some very rich observations and comments there form the panel. So I think we've got time to take some questions. If we pass the microphone down to the floor. So in the far corner at the back. Female Audience Member Hi, my name's Andrew Collins, I work for a company called The Export Department. So we provide support, advice and outsourced exporting services for novice exporters and also experienced exporters. I'm interested in your discussion about how businesses are going to adapt to Brexit, which sadly I think is probably going to happen. Our challenge that we're finding, and indeed my peers within the Institute of Export are finding, is the step before that. So we're not even getting to the point of helping our clients to learn how to adapt for the changes, we're actually struggling to get them to consider the impact that Brexit is going to have on their business. So getting them to consider, you know, what the VAT implications are, what the implications are for their EU workers. I'm sure much of it is driven by the uncertainty around what Brexit is actually going to look like, however we're finding that at least amongst the SME community there's a staggeringly high level of complacency, or inertia. It's kind of the attitude is kind of 'well, we'll look at it when it happens', which in our opinion and certainly amongst my peers within the Institute is, that's actually too late. I'd be interested to know from the panel and indeed people attending today whether they're finding that same level of complacency and if they have any strategies or any experience of actually getting companies to start considering the potential impact now rather than waiting to the end of the transition period. Thank you. Chair Who would like to take that one first? Simon? Simon Collinson So I've done a little work on SMEs; there are other experts here, but I think most of what we know bears out your impressions. I mean small firms, regardless of Brexit, have a very small amount of resources, they have very little time to actually invest in understanding strategically what the future might bring, or adapt strategically to that. They are very much hand to mouth and the smaller the firm, the more hand to mouth it is. They really only have time to deal with the real practicalities of what's hitting them in the next week or month. So that's not very helpful but the reason there's so much churn, ie business failure and business birth rate in the UK, is because of that need to adapt. Basically firms are not strategically informed, therefore they simply go out of the market and they re-enter and they go out of the market because they fail. So that sounds a bit hopeless. I think large firms, as I indicated earlier, are in a different position. They've got the resources and they're investing in understanding how they need to reconfigure the locations of their activities to account for what Brexit might bring. But coming back to small firms, I think they're the key problem and I think the CBI, the Small Business Federation and a number of other Bodies are trying to put information sheets and support through counselling and through meetings. Some idea of the different scenarios and some idea of the practical challenges, from paperwork to tax, to import/export cost additions that'll come from Brexit, the dilemma I hear from them is there's a chicken and egg problem. There are a range of scenarios - they've been presented today - we don't actually know which of those scenarios will be the final outcome, therefore you're sort of giving a menu of possibility to small firms and they find that again difficult to take action on the [0:26:08] of those companies because they've got small amounts of money to invest in what might be coming. I think, again regardless of all that, any efforts that we can make to push firms to think more seriously about exports, to reduce their dependency on domestic market and regional supply chains is going to help. Anything we can do to subsidise, to support or inform them of the opportunities in and beyond Europe in export and import terms so that they really stretch themselves and become more international, is going to be a positive step forward. But this is a very difficult time for small firms. Lloyd Broad I'll just say one quick thing. You talk about adaptation and different scenarios and I can imagine this must be - I work in the public sector, what would I know about business? - but I can imagine trying to find the headspace to try and absolutely understand what do I need to do, what do I need to prepare for, where it's so unknown? It can almost be impossible. What am I adapting to? What I do know is I think over the two years since the vote to Leave the European Union, a lot of organisations have been doing a lot more to try and unpick and understand what those scenarios are and make them more visible to businesses so they don't have to do the real thinking themselves, it can almost be done for them and just one point of reference that I'm aware of is our colleagues up the road at the Chamber of Commerce have produced a Brexit toolkit for SMEs which I think maps out some of those scenarios and starts to help them along their way towards that adaptation. And I think we need more of that. We need to support them along the way in terms of giving them what those scenarios really mean in their particular circumstance. Paul Forrest I think part of the problem is a lot of SMEs don't realise they export; they just say that they sell their stuff to Jaguar Land Rover, or they'll sell it to Rolls Royce, and obviously with 80% of their product going overseas, quite a lot of SMEs don't realise actually they are involved in the export market and it may be that as the French probably in particular start to insist on more Draconian rules of origin, that those things may come in a bit harder. The other problem is, and this is again where we're going to have a look at how you transform the governments in this country is the paltry coverage of the membership business organisations of the actual business sector and one of the things we're probably going to have to adopt is something that was in the Heseltine Report which said that to be a registered company you have to be a member of a Chamber of Commerce or something like that, so that the way we transmit information has a much greater coverage than the partial one we have at the minute. On the positive side, Britain is actually very different from most other EU countries in that apart from Malta, it's the only economy that exports more to non-EU countries than to EU countries, whereas all the rest of them are importing and exporting to each other. Chair More questions? We have a gentleman on the left here, the lady with the yellow jacket and the man at the back with the black jacket. I think we'll hold it with those three questions, OK? Male Audience Member Hello, Mike Walsh, Coventry University Economics Course Director. I just had a question, something that Frank was saying about one solution maybe to cut costs would be greater agglomeration. I just wondered what may be the impact of that on regional inequalities and would devolution be part of the solution to any negative impact? Simon Collinson I mean I don't know, Frank will correct me but my take on this is there is the possibility for bigger scale economies in agglomeration so there will be clustering and there will be clustering towards areas that have particular specialisations and particular advantages. The counter view to that is the technological revolution which suggests that actually some aspects of distance - I mean physical product movements and some face to face business is going to be done easier across larger distances and I see two competing trends there and I haven't figured out quite, because I think it's very sector specific and almost firm in business activity specific, how those two will play out against each other. So that's not a good answer and if it was Frank's data that you were looking at that led you to think that, you'll probably have to ask Frank for the definitive answer between those two. Lloyd Broad I'll give you a very obvious perspective from a local authority. Agglomeration is important and I think when we're investing around the world or competing around the world or trying to sell what we are and what we can offer, that's when it becomes really pertinent and I think what we have is - I don't necessarily agree with what you said earlier, which is part of the response to this question, which was about we have coherent governance. Simon Collinson Relatively. Lloyd Broad Relatively. Compared to other, let's call them European Member States for example, I think we have overly complex governance which is really problematic. On a daily basis I'm not quite sure whether wearing a local government hat, a Birmingham City Council hat, a LEP hat, a combined authority hat or a Midlands Engine hat, and I'm different things in different places all the time. So from a person that lives and breathes this world on a day to day basis it's a very overly complex and confusing landscape for us that work in it, never mind those that don't. So agglomeration is good if we're selling our wares to China and we go over as a Midlands Engine and selling the whole of the belt across the middle of the country and say 'come and invest in the Midlands', because at the end of the day they will understand that scale and that scope and that agglomeration. When it comes to devolution I will talk about subsidiarity and I will talk about getting subsidiarity down to the lowest level. I'll look at index of multiple deprivation, yet look at the millions of pounds we've invested in skills and employment initiatives that haven't made a scrap of difference. Why? Because it's overly centralised, national policies of employment and skills that don't scratch the surface of what we need to do in cities. So I will talk about subsidiarity rather than agglomeration. So I think it's horses for courses, dependent on what you want to talk about. It's relevant in other areas, I think less so. Paul Forrest Well I think that's where the infrastructure question is really important. If you look at our innovation in the West Midlands, it's because four or five [0:32:57] Black Country manufacturers will come together and produce something and when you produce an axle or a ball bearing, there's probably four or five little companies having to work together to do it and therefore if you're going to be successful agglomeration, you're really going to have to look at your internal connectivity and transport infrastructure across the whole range. It's ridiculous, your largest concentration of SME manufacturing units in the Black Country, if you have to drive from Dudley to Wolverhampton it can take over an hour and that's obviously having a big drain on productivity. So I think again it comes back to that question of being able to identify where the local needs are and perhaps the best example is we've got three railway stations, probably four that we're going to have, aren't going to be connected, whereas when they built the Bullring, somebody came up with the bright idea of putting a tunnel underneath and connecting that with Moor Street. Similarly, we should have built an extra couple of railway lines under Birmingham New Street to actually connect Shrewsbury and the rest of the region. It's having that joined up thinking at a local level that can really boost the economy. Chair I think we have two more questions. The lady in the yellow jacket and then afterwards the man behind in the black jacket. Female Audience Member Hello. I'm Janet King and I'm a campaigner for the European Movement and we are campaigning for a democratic people's vote and for a third option in the October parliamentary vote, that option being not to accept either form of Brexit, either with a deal or without a deal, or being forced to abstain but actually being allowed a vote to Remain. So we're not giving up. But my question is not political, it's not about that. It's about the largest - we're the largest recipients of Research & Development funding from the EU and I believe that funding, there are still applications going on; I know for ESF funding and for ERG funding as well. So they haven't given up on us. How are we going to replace that? This was a question really for the engineers as well as the other policy makers, how are you going to replace funding that's including funding for Warwick University for instance, for lower vehicle emissions research, for my local university, Worcester - this is not relevant perhaps so much here but for mental health research - and for Birmingham University and Aston, Wolverhampton, millions and millions of pounds for communications. How are you going to replace it? Could we have some concrete suggestions? I don't think our present government will either be minded to replace that or will have the ability actually without increasing taxation. What are you going to do about it? Lloyd Broad What are we going to do about it? Some of us are doing something about it. What control and leverage we'll have over providing a definitive answer to your question, is questionable, but we're having a go. I made reference this morning in terms of my contribution to some of the things we've been doing locally and nationally and across Europe and when you think about funding and replacing funding, I'll look at it in two particular aspects. There is the domestic aspect of the funding - you used the acronyms ESF and ERDF, which is the people and skills fund and the physical infrastructure and business funds - when I made reference to us receiving over a billion pounds for this sort of stuff, that's the bread and butter EU money that we get back. It's worth over £6bn over that seven year period in England so it's quite significant and their proposal is to introduce something called a 'Shared Prosperity Fund'. They've started consulting with a range of stakeholders around the country including local government, the core cities, the university sector and many other sectors, about the nature of that Shared Prosperity Fund. It's still about trying to address regional imbalances - and those inter-regional imbalances within the UK as well - and part of that consultation process right now is what would the key features of the UK Shared Prosperity Fund look like? What sort of features of the current EU programmes would we want to keep and what sort of things and features would we want to ditch. Then what would be the governance arrangements that you'd wrap around that [0:37:30] to enable cities to have the full devolved powers and ability to spend those in a localised manner against localised industrial strategies, rather than national strategies that dictate how we spend the money. So we're in consultation with them with regards to what that SPF - Shared Prosperity Fund - would look like and we have some very similar principles: we want it to be over long term plans, seven to ten year programmes, we want at least minimum values, we want it fully devolved, greater flexibility, local prioritisation and targeting, key principles like that. The second aspect is the more collaborative funds. So you talk about funds for universities, for research, for innovation etc, so we talk about a rise in 2020 funding for example. I think the government are minded to want to maintain access to these and you can maintain access to these programmes even if you're not an EU member. Norway accesses Horizon 2020 programmes. So there's a discussion to be had and a negotiation to be had about how we maintain access to what I call 'collaboration programmes'. Cities like mine where you get engaged in less so Horizon 2020 but other collaboration programmes like [InterReg, Urbact - 0:37:30] and others, which is cities sharing knowledge with cities on key issues like climate change adaption or migration or issues of that ilk. I did mention earlier about some of our asks to the European Union and things we want to raise. It's about our ability where possible to, when we leave the European Union, pay in, buy our presence in these initiatives to maintain that ability to share knowledge, innovation, competitiveness, skills, etc, talent, and maintain that ability to cooperate around Europe. So discussions are going on, yeah? On the latter that I've just talked about, I'm hopeful that we'll still be able to access those. For the earlier ones which are the domestic focus ones, there will be a new programme that we're seeking to influence. Simon Collinson Just very briefly, I think there are two different types of funds and we need to differentiate between them. One is the regional, which I think there are probably more questions around than the research for universities. I think that's - I'm not saying it's going to compensate for what we might lose but UKRI now is in formation and it's pulling together the research councils and Innovate UK and that's a £7bn budget. We've increase the amount of funding going through those channels and it is going into things from anything from mental health to certain asset investments. The ambition of the government, whether we ever get there or not, is to achieve up to 3.2% of national GDP spent on R&D. At the moment we're in the low 2 point something, 2.2 to 2.3%. So there's an ambition to increase the proportion of the national budget that goes into R&D and specifically have universities and firms working more closely together, sometimes at the regional level, to use those funds. Whether it ever compensates for what we lose from moving out of the EU is a very open question and the Regional Development Funds, which have really assisted places like the West Midlands, there's even bigger question marks over what they will be replaced over in terms of the magnitude of the money we used to get from those sources. Paul Forrest I think one of the big problems is that the Treasury failed to maximise the potential revenue, or funding, that we could have got from the European Union. In contrast to all other European countries, they adopted some byzantine scheme which meant we never had matched funding really taking place and that really compromised in a number of areas. So it's not just a matter of looking at the funds that we did get but looking at how we come up with a much more comprehensive and transparent system of funding research and development. Chair And we have one last question. Male Audience Member Thank you. Mike [0:41:41] from the Building Alliance. I think in this perfect work that we describe pre the Brexit vote, we forget to understand that we have a £56bn training deficit in January this year despite the currency being in the best possible place. So I wonder how we're going to build the [0:42:08] economy. If I listen throughout today, I could be forgiven for believing that the West Midlands economy is just about automotive, that's it, that's us, we're a one-trick pony. Of course we're not and there's huge industries out there, for instance construction which is probably the biggest single thing that we're going to do in this region over the next 15 years is build the things we need, including the new infrastructure and a lot of homes. It concerns me that in our industry which gets little or no recognition and support in the building products sector, in fact we've got the opposite going on so we've got government actually actively proposing modular construction, timber frame construction and steel coming in from abroad to replace the manufacturing businesses that we've got actually in this region because this is where we make it all. 80% of the materials that go to build a house for instance are made here in the UK. So my question to the panel is, you know, how do we take this opportunity - and we have to treat this as an opportunity, not a threat - and my friend says 'why are businesses accepting it?', well business has to treat everything as an opportunity - how do we take the opportunity to build the [0:43:21] economy and create as many jobs as we possibly can, particularly through the inclusive position that you're talking about really where we've still got in this region and also in this area, 12,000 people, the youth of this city who are unemployed and we can't move into employment. We can do that in construction. How do we take that opportunity? Thank you. Chair Who would like to take that one? Simon? Simon Collinson I'll have a quick go. So I think your point is very well taken and first of all we have a fairly robust analysis of what exactly the regional economy is made up of and you're right, we've heard a lot about automotive today but there are huge other business activities that are critically important. One of the things we're working on which is critically important for these sorts of policy questions is what is the different impact of different sectors and different firms on the region? What's interesting about construction, not to contradict what you've just said, it is critically important, but if you take a very large construction firm, an awful lot of its impact is dissipated across the very large number of projects it does either across the country or internationally. So when a construction company works on a project, its employment multiplier - the people it employs - and quite a lot of its supply chain tends to follow where those projects are based. If you take an automotive company like JLR, its supply chain and most of what it does, it's back office and it's employees, actually spend their money within the region. So if you compare a Carillion - God rest its soul - and a JLR, we know that the actual regional impact is magnitudinally [sic] different because of the structure of what that firm does that actually impacts directly on the region. Now that doesn't contradict what you've just said, it means we need much more intelligence about the differences in sectors, how they fit into different global trends and different firms, that some people believe are really adding huge impact to the region, and aren't, and other firms that probably are adding a lot more impact than we can actually tell through the data. Once we get that, policy makers then need to really treat firms differently because some of those firms are critical for the region, others less so. Lloyd Broad I think answering your question is really difficult but I'll provide two responses. One, I think some things potentially are in the gift of local government. As an example I think we could and we should more effectively use planning and procurement policy to better effect with regards to how we do stuff, build stuff, make stuff, in this city. And we do have something in Birmingham for example called the Business Charter for Social Responsibility that builds in a lot of, let's call it principles and conditions, when it comes to us giving out large contracts, as to what we expect in return for those contracts in terms of environmental impact, local inclusion, employment outcomes, etc. So I think that's important and I think we can step up and do more and be even more adventurous than we are already. The second thing goes back to skills issues and you talk about employment etc, I think it goes back to the skills issues and I think we need to do a lot more collectively around the ability, around vocational education, training and employment, and particularly around apprenticeships. You know, we within this local authority are looking at how we should be stepping up, perhaps as an exemplar employer in terms of utilising apprenticeships to better effect to fill gaps and shortages we have as a local authority in key occupations in terms of delivering all sorts of, whether it's a housing caretaker or whether it's a construction worker, etc, etc. And again, working through our supply chain, construction supply chains, and working better with employers, particularly in the growth sectors where there's stuff going on, where you see the cranes. Notwithstanding working Carillion, which of course was a touch difficult, but you know whether it's Birmingham Smithfield, HS2 Curzon, etc, etc, through our planning and procurement and through better partnership working with employers, potentially new employers and the FE sector - and of course the HE sector - we should be doing a lot more to build up the skills of local people for them to take up the opportunities that are being developed. Paul Forrest Just quickly, I think the loss of capacity in the construction sector that was lost in the last recession, which has subsequently been replaced by international products, highlights one of the big failures of making use of EU funds. We could have adopted a [0:48:10] scheme where instead of just sacking people and making them redundant, you could have sent them on training courses. There was something like 900 million Euros available for the English regions that could have been used during the depths of the recession, but the Treasurer refused to sign the document, which meant we could have protected that part of the construction sector. So it highlights the fact that going forward we're going to be in a much more competitive and comparative international business environment and therefore we need to look at how we have a proper industrial strategy that realises that you can do things when everything's booming, but you've also got to do things when there's a downturn. Chair And just to clarify actually in terms of the data that the project has produced that you can access on the website, the construction industry is by far the least exposed major industry to Brexit of any industry. So the structure of the construction industry, the way it works, is very different to the majority of other industries. So the kind of issues that you're suggesting and the panel have kind of responded to, are probably very pertinent, and in terms of other industries which are very different, might want to think about some of the differential responses at a policy level or institutional level. Anyway, I'd just like to thank the panel. It's been extremely interesting. I think everyone will accept and understand that it's been terrific and I'm going to ask Raquel now to come up here. Raquel Ortega-Argiles [0:49:41] just to conclude today, first a very big thanks, I think to you first to come here today and support us. Also to all the presenters. I think it has been a very interesting day, or half a day, and also all the people at City-REDI that have helped me to make this happen. So special thanks to Chloe, Denise and Sarah who is registration, but also all the other colleagues. So [0:50:14] after the consent of course of all the presenters. We did the same for the Edinburgh ones so it's going to be shared among all the audience and we are hoping to publish all them at the website. So you follow us in the website, more blogs and people are going to be coming very soon. Of course, if you have liked today, you are welcome also to join us next week in London and the week after in Leeds. Today we were talking about advanced manufacturing; next week we are talking about services. So all these questions about the private sector and the firms, we will have people from the CBI, they have a report that they have discussed with Ministers and it's really going for [0:50:59] and making a big, big issue in terms of the negotiations. So if you are interested we are going to have a presentation from people from the CBI next week. Just a logistic thing, interviews are going to be taken here now during the lunch, so if you are going to be interviewed please stay where you are and for the other ones, we are asking you to please leave the room because the interviews need to be in silence. So enjoy the lunch and thank you very much for coming today. Thank you. [APPLAUSE] END OF RECORDING Birmingham Workshop Title: David Bailey Duration: 1.00 mins Speaker: David Bailey What was great about today's event, and also the research that's been done as part of the project, is to show how exposed the West Midlands is to Brexit, particularly through the linkages through supply chains that trade internationally. So, whatever comes out of this I think, is the need for much more in the way of devolution, down to the local level and the regional level. Not only to be able to cope with Brexit, but also to get hold of some of the big challenges and opportunities that are coming up. So I want to see as much as possible in the way of devolutions, so that we can have a much more of a regional scale industrial strategy. I'd actually like to see a federal Britain. I'd like to see real devolution of powers, resources, competencies down to local level, so that we can devise the training strategies that we want locally, so that we can intervene to support companies where we need it, and to be able to make the big decisions over things like infrastructure and skills. So as much in the way of devolution as possible, down to the local level, and not so much of this kind of fragmented form of LEPs combined authorities, Midlands engines that we have at the moment. So much more full scale devolution. END OF RECORDING Title: Nigel Driffield Duration: 1.51 mins Speaker: Nigel Driffield The West Midlands has done very well over the last 10 years in attracting foreign investment. It's been largely around 2 sorts of sectors. Firstly, the sorts of sectors that bring high levels of technology with them, the high tech companies. It doesn't generate very much in terms of employment, but it adds hugely to local productivity. At the other end of the scale, you have sectors like perhaps logistics, or food, which is great for the region because it generates large numbers of jobs, and typically for people who were unemployed or under employed before, but they tend to be relatively low skilled jobs. So, in a post Brexit world where does that leave us? Well, if we are going to be challenged on exporting and there is going to be less intrafirm trade, that is bits moving between Europe through supply chains, there might be less need for logistics firms. Equally, logistics firms might become lorry parks as holding goods for people who are trying to clear customs. So there might still be scope there. The food industry is largely for domestic consumption, not wholly, but largely so. That depends on the nature of the food industry post Brexit, with changes to the common agricultural policy and so on. The big challenge is at the top end. If you think of what I said, the sweet spot really is advanced manufacturing, because advanced manufacturing is high tech stuff and it employs people. And the big challenge is how we are going to retain that, where we have supply chains that cross into and out of Europe, where the value proposition for this region has been come here, as a bridge, into Europe. And that is going to be the big challenge. END OF RECORDING Title: Dan Wincott Duration: 1.08 mins Speaker: Dan Wincott National and local regional responses are critically important, and industrial strategy, the bridges, the national and local levels, is a vital element of a full response to Brexit. But getting the 2 levels to work together, that's a challenge, and that's a challenge that will need to be met if we're gonna have the best possible economic results after Brexit. The UK is still one of the most centralised advanced countries in the world. Devolution has got to be a major part of the response to Brexit if it's going to be met effectively. But the UK faces major challenges in pursuing a devolved system of governance and policy making, that is coherent and transparent within England, across England and across the UK as a whole. And those challenges are probably as powerful as the economic challenges of Brexit themselves. END OF RECORDING Title: Paul Forrest Duration: 1.29 mins Speaker: Paul Forrest Well the biggest challenge is gonna be how we secure access to the EU market [00:07] leaving the EU, and not leaving Europe and therefore we'll still be one of the most important trading partners. And the 3 key markets are the Netherlands, Germany and France, and we need to look at how we secure connectivity to those areas. In addition, we need to look at how the trading negotiations accommodate the manufacturing sector and the value added supply chains within the manufacturing sector in the Midlands, but also just as critical are the service sector industries in design and IT and augmented reality, that helps support the manufacturing sector. And that's about nearly 10% of the regional economy, is what we would call manu services - or services sector industries that are wholly or partially dependent on the manufacturing sector. And that's gonna be a key component of growth as we move into industry 4.0. And so we'll be looking to have that sustained. But on a wider context and a global context, we need to be looking at international connectivity. Both in terms of access for rail, and also access on airports, by airports, to a major market. And also making sure that we look at the sea connectivity, because obviously that's a key component, merchandise exports, and the links between the West Midlands and its key export ports. Say, Hollyhead, Liverpool, Hull, and [01:28] to see how we move forward. END OF RECORDING Title: Phil McCann Duration: 3.05 mins Speaker: Phil McCann I think that the national and local and industrial strategies - this new approach to industrial policy, potentially offers some significant advantages for different parts of the UK. The most important point though is to allow localities where there's devolved administrations, to the regional areas, labs, whatever the geography is, to try to get to grips with the realities of the locality, rather than just thinking in national numbers all the time. Our policy settings in the UK are far too centralised, far too top down, far too aggregate in nature, and also in terms of thinking. And this is the way to empower local actors, stakeholders, to come together to work together, on the local problems as they understand them. They know what the bottlenecks are. They know what the challenges are. And it's their responsibility to try and come up with what are potentially, workable and feasible solutions. Importantly here, we need consensus and working across political boundaries. We need people from all political parties, different types of stakeholders, coming together to try and find local solutions for local problems. The withdrawal of the European funding particularly in regional and admin policy, cohesion funds, is going to be a major issue for many parts of the UK. The level of funding that many regions, particularly economically weaker regions have received over the last 3 or 4 decades has been enormous. It's tens of billions. And the key things of the EU policies has always been that - it's about integrating long term, joining up policy streams for long term investment. So the kind of replacement that we will need to see in the UK, the principles would be firstly, we need to have polices and programme that explicitly target the weaker areas. Secondly they need to be long term, going beyond individual electoral cycles, whether on a local or a national level, so that you don't get changing of policy, changing tack. There needs to be continuity, so private sector and public sector bodies can genuinely get involved. Thirdly, what we also need to see are programmes which allow flexibility. Local decision making, local management, shared management where local has to work with national government, but also many areas where local and regional operate largely independent of national government. We don't want in the end top down thinking, where Whitehall are always overseeing and looking at what local and regional authorities are doing. It's the wrong way around. We need to develop much more of a bottom up system. The fourth element, which is really important, is we need the fire power. The kind of issues we're talking about, local economic development, and the challenges are enormous, particularly in the post Brexit context. And what we need is a policy system which has the resources to make a difference. We can't see anything which kind of scatters resources between places, too fragmented, too small scale, because we also know from our own work in this programme, in this project for changing Europe, is it's the economically weaker parts of the UK which are more exposed to Brexit. So they're going to need an enormous funding target, enormous fire power - that's the kind of language I would use to make sure that those regions can best respond. END OF RECORDING Title: Lloyd Broad Duration: 2.34 mins Speaker: Lloyd Broad I think the key challenge that we face is the ability to foster appropriate devolution down to local level. Brexit's gonna flag up a lot of challenges, and what local government needs to do, and what a range of partners need to do is be able to tailor local solutions to the problems we have. Funding is one of those key policy challenges. We will lose an awful lot of money that cities benefit from, in terms of responding to business support opportunities, employment skills, as well as environmental and other low carbon matters. And that needs to be replaced appropriately, and needs to be local flexibility, and the ability for local government and its partners to respond accordingly. Inclusive growth is another issue that we need to address. There is a local of neighbourhood policy, neighbourhood renewal policies in the country, and we need to build place based holistic solutions to the problems that we have, whether that is around supporting productivity, whether it's around driving the skills that we need for the future, whether it's around uplifting workless, unemployed people. We need inclusive growth to create a future post Brexit environment that works for all, and not just the few. The workshop was really helpful for me. I'm not an academic, and we had a number of academics today that have shared an awful lot of insight, research, knowledge, data, which isn't easily and readily accessible. In the last 2 years, or almost 2 years since we chose to leave the European Union, people ask people like me in local government what's really going to be the impact of Brexit? What does it really mean? And it's really difficult to give them an appropriate amount of evidence which is focused on the unknown. Nobody knows what will happen post Brexit. So there's been a dearth of real quality data that can support possible scenarios of what the future may look like. And then we're planning - when we are planning in local government terms for preparing our business, preparing our people, preparing our communities for what life will be like outside the European Union, we need to have a much better understanding of what those impacts can be, so we can mitigate against it. And we can lobby governments in the context of devolution, and localised industrial strategies, do the best thing we can to prevent or mitigate against those negative impacts. So today what it's told me, is that there is a raft of evidence that's been gathered over the last 2 years, that can help us. There's local government policy makers, make some key decisions moving forward to respond in the appropriate way. END OF RECORDING Title: Simon Collinson Duration: 2.58 mins Speaker: Simon Collinson So I'm a big fan of industrial strategies, and I think we've made great progress in the last few years at developing a national industrial strategy, which combines I think the strengths of universities in Science and Technology, and the strengths of some of the firms that we've got in the country, with areas of government policy. So we're getting much more coherent at understanding where our competitive advantages are currently in the UK, and how we're going to develop those to improve competitive advantage and innovation capacity in the future. I think where we need to make more progress is in a higher level of regional devolution of industrial strategy. Both how we govern and oversee, and set up policies to encourage industrial strategy, but also how we de-standardise or customise particular parts of the industrial strategy so they support regions. So, when I say we need more progress on that, we need to devolve much more power, much more resources to regional governments, to help particular firms in their particular regions, to focus on technologies and to overcome constraints, that are unique to their regions. OK, so all the UK is not the same, the UK varies immensely. And within the envelope of a standard national industrial strategy, we need to evolve the power and the resources, and I think the capability to develop regional variations that are going to help the regions move forward. So at the moment the UK's pretty fragmented in terms of how regions, you know, cope with the unique problems that affect them. We are also highly centralised - we're one of the most centralised countries in the OECD, both in terms of financing, financial control is London, and in terms of government, government control and decision making is predominantly made in London. So we're more centralised than the French, or most other OECD states. So what I'd like to see is further devolution, full stop - we need more power and resources in the regions. I think the second thing is though, is we need a much more sophisticated, and much more coherent collaboration between businesses in different regions. The local government organisations, combined authorities, LEPS, Chambers of Commerce, and Universities. That sort of triangulation, the 3 different types of organisations working better together, both to enhance innovation but also to overcome constraints that are specific to regions. And universities play an important role in this. They are anchor institutions, they're embedded within the regional infrastructure, but they're also long term. They don't move in and out like firms do, and they don't follow the vagaries of voters - you know, we don't get Labour then Conservative, like public policy organisations. Universities are there to stay, and a source of great skills for the region, and they're also sources of science and technology that will underpin the innovations for a region. So universities can play a strong role working in collaboration at a regional level with businesses, the firms that are there and local government authorities. END OF RECORDING Devolved Administration Workshop Title: Brexit Edinburgh Interview Jonathan Price Duration: 2.15 mins Speaker: Jonathan Price I think in many ways the key economic development challenges that Wales will face in the post Brexit world are similar to the ones they faced in the past. I think the best analysis that we've got, suggests that the consequence of Brexit will be a lower rate of economic growth than otherwise. Lower tax revenues to the UK Government, and lower revenues for the Welsh Government as a consequence. And therefore reduced money to spend on public services. I think that will exacerbate existing challenges for the Welsh Government, in terms of delivering good public services. The extent of that problem will depend very much on the nature that the Brexit settlement eventually takes. So I think we can see quite a divergent range of outcomes from a relatively modest impact, if you retain a high degree of access to the single market and customs union, through to quite severe impacts if we don't. So I think in many ways the nature of the challenge is very much up for grabs. I think the underlying problems that we face however, in terms of our economic structure, promoting faster growth, are exacerbated but not fundamentally changed by Brexit. Of course it's true that certain industries will be adversely affected. Some more than others. But, I think people often neglect the extent to which in the normal course of economic development industries, some industries grow, others contract. With this ongoing process of churning the economy, the economy in Wales now looks very different than it did 15 or 20 years ago. And yet many of the economic development challenges remain the same. And I think fundamentally, they remain challenges about our skills base, our connective infrastructure, and I think a lot of the other things that consequent on those fundamental challenges. In a way, it's quite a difficult answer because a lot of the challenges are about delivering effectively in these areas. And I think there's really a risk of sometimes being seduced by new and rather attractive theories and proposals, which often lack any substantial evidential support. I think we've seen a wave of fashions really in economic development, which have had very little impact on the relative standing of the UK countries and regions. END OF RECORDING Title: Brexit Edinburgh Interview - Duncan Duration: 6.44 mins Speaker: Duncan The difficulty that we've had in the UK of the pressure regions of southern Britain having inadequate investment in schools, infrastructure, and so on, alongside the problem of really poor spatial policies for lagging industrial regions in remoter rural regions. It means that after Brexit, we really have to have a much more effective spatial policy. The concern would be that for the older industrial regions, the regions in a sense that benefitted most from being in the European Union, such as the North East and the Welsh Valleys which voted pretty clearly against being in the Union. We had a failure of UK spatial policy for that. So that actually having a coherent strategic economic development approach that integrates these regions or adjust them, has to finally be done after almost 40 years of de-industrialisation. So, in that context regional policy has to be important. At the moment, I'm extremely concerned that the UK Government doesn't seem to have thought about what regional policy might look like, and in fact in the last 10 years, it's been rather edged into regional policy simply because we were in the European Union. The consequence of that, those of us in the regions are very concerned about where national spatial economic policy might go. As for the rural areas in the CAP, when Michael Gove became the Secretary of State he had a clear moment thinking about how rural policy was not the same as agricultural policy. And that the CAP might be used in rather different ways, promoting economic development, ecological services. That was actually I think the right way to be going. My concern will be that in the absence of sufficient public spending resource because we'll have less public resource to spend. That the UK Government will go in for a whole series of non systematic spatial deals - in other words, regional policy and rural policy might become like city deal policy, which might be individually fine, but they don't add up to a coherent system of development for Britain. So, I think those of us that are concerned with spatial development are really rather anxious about how things will now develop. I think that the most significant effect will be reduced level of output, growth or output growth. And with it, reduced resource from the public sector. In the Scottish context, we have an East of Scotland which is prosperous, and which growth rates are quite high, and in which focus particularly around Edinburgh where there are relatively more economic base, where income levels in the metropolitan region, the region competing effectively. I actually think that it will adjust and thrive regardless of this scenario. In that sense it's kind of like a mini London. It has these adjustment capabilities. The West of Scotland, that's more problematic. We've seen Glasgow finally get to the point of beginning to stabilise it's economic base and expand a little. There's going to be a really serious negative shock in the West in the context where just in a sense, stopping Glasgow becoming the Detroit of the UK, has been a major challenge. Brexit's not gonna help that in any regard. And I think that we have to think very seriously in the Scottish context, about do we connect to Europe, how do we connect to Ireland? How do we in a sense, reposition ourselves? And I think that will have fundamental issues in relation to the debate about the organisation of Scottish economic policy and indeed Scottish independence. So I think for us in Scotland, this is just another change in the constitutional dynamic that I think will now continue. I think that the - in the context of all of the regions, and policy, I think we need much more coherent strategic policies applied at each regional scale. And then scales within them - metropolitan areas and so on. I think in the English context, city deals have induced effective strategic decision taking about investment and the economy in a number of metropolitan areas. But missed out in others. At the same time, broader regional framework for decision taking is weak. I think in the Scottish context, the Scottish Government have actually taken a number of approaches in economic policy. For instance, emphasising [5:00] of growth, which I think has been a more effective way of thinking about the challenges we have than you would find prevailing say in the regions of England. So that I think there are things that you can draw from that. I think that there are also things we learn from other areas. Scotland learns a lot from the North West in terms of thinking about infrastructure and the economy, and the way that we take things forward. In terms of the kind of architecture of the delivery of policy, I think that in Scotland institutions are still in floods with the National Enterprise Agency, which has I think again something that with the scrapping of the Regional Development agency in England, I think it's still been to Scotland's advantage, with Scottish enterprise in play in the field. But I think that there's also the value in local enterprise partnerships, and perhaps that's something we need to learn from other regions in the UK. So I think there's a mix of lessons that I think that what you can see, partly because of its historic dependence on the work grant and that in a sense being reduced, we now have to make our own way to a much greater extent. Strategic economic decision taking in Scotland now has to be better than at any time in the last century. And I think that we're beginning to put in place some quite effective mechanisms for doing that. So I think that we have to take an outward look at what other regions and other countries are doing, but equally I think there are things here that should be of interest for other localities. END OF RECORDING Title: David Heald Duration: 6.11 mins Speaker: David Heald The fundamental problem that nobody anticipated in 1998 when the UK got devolution in Scotland, Wales and Northern Ireland, was that the UK in time might leave the European Union. The devolution settlement was very different in the 1990s from what was anticipated in the 1970s, in that essentially it was a model between powers that were devolved and that powers that were reserved. But the essential point was that anything that not actually explicitly reserved, was devolved. Now that was actually very important in certain contexts like agriculture and fisheries, where the European Union set the framework. So the European Union set the framework for policy within significant areas in terms of for example, state aid, agricultural support, certain kinds of economic development, fisheries and such like. And what actually happened is that within that framework one can extensively devolve the essential administration of those policy areas to the devolved administrations, because the framework was a common European Union framework. What nobody anticipated is that the United Kingdom would leave the European Union, with the result that one would need a separate United Kingdom framework, within which to operate. It is not in the interests of the devolved nations to have a competition for state aid subsidy for agricultural subsidy or for fisheries policy, between the different parts of the European Union. The problem is, that the United Kingdom government particularly since 2010, tends to see the devolved administrations as essentially inferior to itself. And rather than being willing to work on a common framework that is agreed between the governments, the United Kingdom government regards it as something that is not that important, but which it will actually impose on the devolved administrations. And essentially that's why it was described, the UK policy was described by the Welsh and Scottish governments as a power grab, and why the Scottish government continues to refuse to agree to put a consent motion in front - legislative consent motion in front of the Scottish Parliament. In terms of what actually happens to the expenditure which has been funded by Europe out of the common pool of European funds, in terms of what actually happens, happens after Brexit, the important point is that that expenditure is very unequally distributed across the nations and regions of the United Kingdom. It is much more important, for example in agriculture, to Scotland, Wales and Northern Ireland, and it is on average to England. So that raises the question of how the repatriated expenditure is deal with. Now, I don't have a great deal of policy competence in the areas - my competence is very much in terms of the financial issues and the public finance matters. There are various models that one could operate, but all those models depend on a very informal system of internal United Kingdom financial management. So for example, the money that is now spent in Scotland, Wales and Northern Ireland on [03:38] repatriating, could be put into the Barnet formula, which is the mechanism for distributing funds between - distributing increasing funds between the different parts of the United Kingdom. There's obviously a question about policy control. If policy control was retained at the United Kingdom level on those areas, the devolved administrations will actually have no policy control over what the additional expenditure in their nations and regions actually is. So one has to think about how the policy allocation relates to the question of question of funding. Now the money could go into the Barnet formula, to just be part of the general pool of money which the Parliament's got to spend. But the important point to remember, is that will then create tensions with those devolved poly-tiers between how much we spend on nurses for National Health Service, and how much you can spend on sheep subsidies for farmers. So some issues that were resolved externally through the devolved nations, are actually going to be very important. The alternative financial model you could adopt - so for example, it could be managed at the UK level, in terms of what the Treasury - like the United Kingdom Treasury calls Annually Managed Expenditure, whereby any expenditure in the devolved nations within the framework of the UK policy, will actually be funded by the Treasury out of this pool of money held at the Treasury. It could either by held at the Treasury as Annually Managed Expenditure, or it could be essentially devolved in administrative terms, so devolved to administrations. So there's a question about who controls the policy and actually who controls the money. The essential point however, is the difficulties are political, because of the challenge to the devolution settlements at 1999, that is actually created by Brexit, and by the attitude of the United Kingdom government. So essentially, people are talking - we're talking ourselves into a constitutional crisis, which in the short run will unquestionably be won by the United Kingdom. But one doesn't have much idea about what the potential consequences will be for the future integrity of the United Kingdom, if the devolution settlement is seen to be rolled back. END OF RECORDING Title: Des McNulty high Duration: 2.01 mins Speaker: Des McNulty I think Scotland is at an advantage and at a disadvantage in relation to Brexit. The advantage is it's got a devolved government that can actually respond to local needs. And really begin to focus on immediate issues that affect that jurisdiction, something that isn't available to some other parts of the UK. On the other hand, because there are tensions between the devolved government and the UK government, and the devolved government don't have full powers over what's happening, then in a sense, there's an interaction between the devolved government and the UK government which is in a sense, at second hand. So you know, devolved government's I think find themselves a bit of difficulty - they've got responsibility and they've got powers, but they haven't got control of the situation. So they're having to adapt to these circumstances. Another issue which I think is really important is the relative scale of devolved governments relative to UK government in terms of capacity. Whereas the UK government might have a hundred civil servants operating in the specialist area of agriculture, the Scottish government might have 5 or 6. But they might have similar kinds of responsibilities. So the scale of operation isn't necessarily, you know, parallel to the scale of the jurisdiction or the scale of resources available. So the impact of the major changes that Brexit's going to bring about, could be potentially disproportionally impact on devolved governments, because they are smaller and have less capacity to adapt and to introduce new frameworks, new legislation etc, etc. So I think partly it's an advantage, because they've actually got, you know, some functionality there, but they're also at a disadvantage relative to the UK as a whole, because the functionality that they've got doesn't match that of the UK government. So, it's a bit of swings and roundabouts situation for them. END OF RECORDING Title: Shane Murphy Duration: 3.03 mins Speaker: Shane Murphy Obviously from a Northern Ireland perspective, the key issue is around the border, and what the resolution is to that. At the moment, there is no resolution, and the final resolution we can't really be clear as to what exactly those impacts might be. Certainly there is an agreed desire to maintain the frictionless border. And in terms of frictionless border, that has a set of interlocking implications for the movement of people on a day to day life - movement of workers, the movement of goods, the delivery of services. All of those intertwine together. And in some respects, a lot of what is effectively local trade, in border areas, which just happens to have an invisible international border down the middle of it, and this has a lot of implications for Northern Ireland, depending on the way it is solved. And certainly on the face of it, there are a number of objectives that need to be solved - it's maintaining this frictionless border, not having any implications for the UK internal market, while at the same time, respecting the EU's norms and rules around the customs union and the internal market. Clearly solving this is - is gonna take a lot of brain power, and some innovative thinking. Clearly the EU side and the UK side are not there, at a single solution. And until we get to that single solution, or until we start to see them zeroing in, and around a common solution, it's very difficult to predict the impacts, because the impacts could be really very different depending on what actually comes out. In terms of devolution and the balance of powers between central Government and devolved administrations, there is also an angle for Northern Ireland as well, and around the border. The debate within the UK has been about whether powers repatriated from Brussels, whether they're appropriately balanced, and whether sufficient powers are going to devolved administrations. Again, depending on how the border question is solved, there could be implications for Northern Ireland, which might in some cases imply a additional powers. Certainly some of the options that are on the table at the moment, or seem to be discussed at the moment, would seem to imply additional levels of devolution, perhaps to make them workable. One example would be the so called, albeit controversial, albeit the EU's version of the backstop, but certainly that text would seem to imply greater levels of devolution than currently. How all that works out no one knows, but again, it seems to be that however it works out, there could be potential implications for devolution. END OF RECORDING Workshop on the 'North' Title: Brexit Leeds interviews Frank van Oort Duration: 0.54 mins Speakers: Frank van Oort The 3 Northern regions I wanted to attract [FDI? 0:04] as they did in the past, continue doing that in the future. Would mostly have to focus on skills, skills of labour, skills of human capital. But should also focus on research and the development of firms and they are pretty good at it. But as I was mentioning today in this workshop before, people tend to focus a lot on Brexit, accessibility issues, and not so much on human capital and other things, which were important in the past, and will remain important further on. And I think they should still focus on that - investing in universities yes, invest in people. And that will in the end give them a competitive advantage. So other regions in Europe who invest in exactly the same thing - so you have to keep up with these issues in order to be competitive. That was one big sentence! Can you get something from that? END OF RECORDING Title: Brexit Leeds interviews Richard Corbett mep high Duration: 2.54 mins Speaker: Richard Corbett They are multiple, but they are very difficult to assess precisely at the moment because we still don't know what, if we go ahead with Brexit, what exactly the deal is going to be. In the news recently, it has been, for instance, issue of what kind of customs arrangements we would have with the EU. The Government still hasn't got its opening negotiation position on this, 2 years after the referendum. But that's crucial. Will our manufacturing sector face customs checks and border checks, and paperwork when dealing with their main export market, for instance? This is also an agricultural region. We don't know what's going to happen. Will our farmers still be part of a European wide agricultural market with agreed levels of subsidies across Europe to farmers, or not? That's crucial for an area that exports a lot of its agricultural products to the rest of Europe. Will our universities be torn out of EU research cooperation or not? That's not been settled or negotiated. What's going to happen to the Humber ports? The Humber estuary is our export highway, pointed to the heart of Europe. Are they going to have to start building customs facilities, and have huge lorry parking spaces to avoid operations stack all the way down the motorways? We still don't know. What's going to happen to our financial sector? Important in Leeds, Halifax and elsewhere. If they lose their rights to passport insurance and banking services across Europe, as they do now. We still don't know. All of these have the potential to go catastrophically wrong. And that in the context, where frankly almost every day, you discover a new problem about Brexit. Things that we didn't know about before, things that we weren't told before. And it's not surprising that public opinion has not rallied behind the result, which is what everybody expected. It's not that at all. If anything it's edging the other way, with people saying mm, we need to be able to reconsider this question. Yes, I think these sorts of events are very useful, because it brings together the academics who study away at all the detail, practitioners, businesses, people working in local authorities and so on, who are all facing this challenge. And again, and again, every time there's a conference like this, you discover new problems with Brexit. Things that we didn't know about before. And it illustrates that the Brexit that we're heading to at the moment, with massive changes, has nothing whatsoever to do with the promises that were made by the Leave campaign or by Brexit ministers. It's looking very, very different and that's why people who voted Leave are perfectly entitled to say hang on a minute, this isn't what I was told, this isn't what we were promised. And it's damn well not what I voted for. END OF RECORDING Title: Brexit Leeds interviews Mayor Steve Rotherham Duration: 1.57 mins Speaker: Mayor Steve Rotherham I think the difficulty for all of us, is that we really don't know what's going to come out of the negotiations, and so we're trying to second guess what the opportunities might be for us. In a western facing port like Liverpool, with the deep sea connection, which is called the [Post Panamacks? 0:16] facility at Liverpool, and historic trade links with America. So we're being slightly more positive than other areas, and despite I think the fact that we will be hit hard by post Brexit issues, like anywhere else, I think there are - or there is the potential for us, to open up new trade deals and to look at what we can do in regard to those historic linkages that we have with North America especially, for across the further globe. [researcher reads a question out, but can't hear it because not near the microphone] Well I think it's an important thing for us isn't it, to get a baseline, and then we can see what the detriments of Brexit may well be. Or, potentially, in years to come, how far we've been able to recover - because I do think there will be after shocks, after Brexit has happened. And they will hit areas like ours, but working class areas particularly hard, and then it's what we can do to really build on those. And therefore the information that's been gathered here and at the other events that have been going on around the country, will be fantastic for us as contemporary evidence of where we currently are, but also of what we might need to do to adjust to the opportunities that Brexit could have for a western facing port like ourselves. END OF RECORDING Title: Brexit Leeds interviews Katie Schmeuker Duration: 3.22 mins Speaker: Katie Schmeuker Well I think the withdrawal from the EU structural funds is actually one of the big opportunities of leaving the European Union, but it's also an area of risk. And if we look at what's happened with urban policy in recent years, particularly over the last 8 years, what we've seen is a real focus on those large metropolitan areas of the North and the Midlands, places like the West Midlands, Greater Manchester, the area around Leeds. But actually the EU structural funds has been one of those few remaining pieces of policy that has offered something of a lifeline to those places that have been slower growing, and to those that have been left behind. And actually those places that were the most likely to vote to leave the European Union, and as we heard at the conference today, a lot of that was about an expression of the dissatisfaction about what has happened in terms of economic growth and the unevenness of economic growth and opportunity across the UK. And it's simply not right that there are some people who are locked out of opportunity as a result of those patterns of growth. Now, by leaving the European Union we do have an opportunity to take those EU structural funds, which are currently not very well targeted, an absolute nightmare to administer, if anyone's actually tried to do so - and actually we can improve that policy area if we make it more targeted, if we make it a flexible fund that focuses not only on how to grow enterprise and investment, and investment and infrastructure on the one hand, but actually connect that up to the skills and training programmes that will enable people currently experiencing poverty to be able to actually access those opportunities. If we can get that right, then that is actually one of the opportunities of Brexit, that could help us to begin to deliver an economy that works for all. But, in order to do that, we need to make sure that the policy is well funded. At the moment there's over a billion pounds a year that goes into EU structural funds being spent in the UK. Around about 2 and half billion pounds per year, if you include in that the match funding that's also required. So that's a big chunk of money. We need to make sure that's secured, and we need to make sure that the policy is designed as part of what the Government calls its UK Shared Prosperity fund, actually does enable places to connect growth to economic opportunity to ensure the prosperity does work for all. I think the research that's been done - it's looking at that really sort of detailed and granular look at what's going on with the way in which goods and services move across borders as we combine different elements from different places to create goods and services in a modern economy. I think that's really, really important insight. And again, the work that has been done around competitiveness, I think provides really important insight. The challenge now I think, is how do you use those insights in setting economic growth and development policies at that sub regional level in the UK. We have minor authorities and mayoral authorities, and local enterprise partnerships across England whose job it is to grow the economy, and they need to understand the implications of that research, in order to be able to think through what some of the impacts on Brexit might be on their area. And what the implications are then for how they need to be prepared. END OF RECORDING Title: Brexit Leeds interviews Sarah Longlands Duration: 2.18 mins Speaker: Sarah Longlands I think there's a number of issues with the withdrawal of EU structural funds following Brexit. First of all, the EU funding that we've had in the UK, particularly in the North of England, has provided a coherence around regional economic development. So it's not just about the funding, but it's about the structure and governance that that has provided, in terms of guiding, and providing a strategic overview how funding should be used to best support those place where market failure is occurring. So that's the first thing really, that sense of a regional structure for how regional development should take place, and the potential opportunity cost of losing that in a post Brexit scenario. The second issue is that we've seen a lot of discussion about what might replace the structural funds. Talked about the shared prosperity fund that was announced in the Conservative manifesto. But as yet, there's very little detail about what that actually means and how that will actually play out. I would like to hope that that is not simply a competitive process, where places are pitched one against the other, in order to draw down that funding. I would like to see a strategic approach to that, which recognises the particular needs and challenges of different types of places. Because if it is purely a competitive process, then those places that are ready, well equipped and well able to respond to funding proposals, will benefit most, because they have the additional capacity and the additional data necessary to make their case. So I would like to see a much more strategic and grown up approach to distributing that funding to meet the challenges of places in the North of England. I'm particularly keen that the funding should not just be focused on the core cities if you like - from our research that we did in 2016 we know that there are many places outside the core cities that are actually growing at a faster rate. For example, places like Durham and Warrington, and it's important that policy makers, through whatever funds come out of the shared prosperity fund recognise the value and importance of places that are not the core cities, because they too are home to tax payers, and they're also some of the places that voted for Brexit. So it's really important that we respond to the challenges and issues that they raised through their vote to leave the EU. END OF RECORDING Title: Brexit Leeds interviews McCauley high Duration: 0.48 mins Speaker: Glen McCauley I thought it was really good actually - I suppose it's not quite what I was expecting. I thought it might be a bit more sort of technically based, so how you undertook the research, and what the impact was. I think because we're in West Yorkshire, I think the piece around devolution - I really wasn't expecting. And I think that fact that it's actually brought to life a whole load of issues, that has made me think about devolution in a sort of completely sort of deeper way really. I think the point of saying that this is sort of crystallised, and shining a light on a whole load of structural things that are wrong in our economy, and Brexit is just something that has actually brought this to life - I think was really good. END OF RECORDING Title: Brexit Leeds interviews Andy Pike Duration: 2.03 mins Speaker: Andy Pike In terms of the post Brexit economic development challenges, here is where we see a curious thing, which is really the aggravation or amplification of a lot of long standing and persistent problems that the North of England has faced. Issues around connectivity and infrastructure, poor skills, weak innovation performance, a highly centralised governance system. And to a degree, a lack of growth enabling public sector investment over the long term. So, in many ways, Brexit is kind of amplifying or intensifying a lot of these issues, which we've been having to face and grapple with, with local, urban and regional policy in the North for many decades. The crucial issue here really in terms of the UK's industrial strategy, is the extent to which it can knit together a vertical kind of central focus on key growth sectors for the future of the UK economy and for its cities and regions, with an understanding of place and how sectors kind of intersect with territorial issues. Be that a city regional or city regional level. I mean these will be fundamental in the sense of trying to connect the national ambitions of the Government in terms of rebalancing the economy, and spatial and sectorial terms. Also, spreading wealth and prosperity across the UK. The place dimension is a fundamental element of that approach and those policies. So crucial things will be trying to decentralise in ways that provide powers and resources to institutions on the ground, to be able to address these kinds of structural issues in cities and regions across the North and beyond. But also as well, trying to have the autonomy and discretion to be able to design policies that are more tailored to particular local predicaments. You know, if there are issues around innovation, then how can they best connect universities together to try and retain graduates in the region, for example. Yes, it's been very enlightening. The research that's been undertaken by the team led by Birmingham, instilling important timely and very important research providing some genuine evidence on the potential impacts of Brexit, on urban and regional development in the UK and beyond. END OF RECORDING London Workshop Title: Brexit London interviews Tony Travis high Duration: 1.36 mins Speaker: Tony Travis The key post Brexit economic challenges for London include migration - London's a city of mass migration, true with a number of cities across the country actually - but the economy has relied on a flow of people from the rest of the world and the rest of the UK, and it will need to continue to do that. I think beyond that, the question of how the Government's negotiations deal with financial services in particular, major industrial sector for London - the way that turns out as well, I think will determine how well the London economy continues to do. And certainly, to judge whether it's done as well as it has in recent years. Well, the Government's published a national industrial strategy - broad, but there it is. Lots of local areas including London, the Mayor of London, have responded and are indeed responding to the imagined changes that will occur as a result of the UK leaving the EU. And of course it's helpful that the Government has got this far. I think the challenge now, particularly for Government is to come up with a series of more detailed policies over issues like migration, like skills, that allow the UK economy and London within it, to continue to flourish, given at the moment, that it's hard for sub national areas to know exactly where the negotiations are going. So they need to know a bit more about what's gonna happen in order to come up with sensible local planning that responds to that. END OF RECORDING Title: Brexit London interviews Ingo Borchert high Duration: 0.41 mins Speaker: Ingo Borchert A lot of service sectors that export to the European market use a number of ways to trade services. They trade services electronically across border, they establish commercial presence, and they send people to Europe or receive them as employees. The European legal framework supports this in a particular way. It will be very important going forward post Brexit. It will be important for British businesses in order to do so, and to do so in a competitive way, that the recollectory align - that the regulations are as much as aligned as possible for British businesses to continue to do so. END OF RECORDING Title: Brexit London interviews Andrew Carter Duration: 0.48 mins Speaker: Andrew Carter So when the UK leaves Brexit, and we're in a post Brexit scenario, I think we're gonna need to see a governance structure that gives much more formal powers to our big cities in particular across England and indeed in Scotland, in Wales. So that's thinking about London, obviously already has a mayor, has a number of powers but he will need more. But it also means places like Greater Manchester, West Midlands, Greater Newcastle, Greater Leeds - those big cities, Glasgow, and Cardiff - I would like to see much more power and responsibility over issues around skills and transport and housing devolved away from Whitehall, and down into those localities. Ideally led by mayors, but not necessarily. So they can have some of the power and control in order to make a success of whatever the post Brexit scenarios are. END OF RECORDING Title: Jonathan Portes Duration: 2.15 mins Speakers: Jonathan Portes Well, London is a city that has benefited hugely from immigration, particularly over the last 20 or 30 years. It's been one of the big drivers behind London's growth. So keeping that going is going to be a real challenge post Brexit. Now, so far, we really have very little idea of what immigration policy after Brexit will look like. London's first priority is making sure that those European citizens, and indeed citizens from elsewhere in the world, who are already here, feel welcome here. Feel, that just because of Brexit, London isn't going to turn its back either on Europe or the world. So it's important communication job, both for the Mayor and the GLA, but also for business, for services and so on, in saying to London citizens, London is still a global city. It's still going to be a global city, and we want people from elsewhere, we depend on people from elsewhere. So there's that. The second point will then be to try and shape our future policy, our future policy towards immigration both from Europe and the rest of the world, in a positive direction. That means lobbying central Government and building up a political pressure to pressure central Government into having a relatively liberal regime. Now it's liberal both in policy terms, in terms of saying who can come here, both from Europe and elsewhere, and who can't, but also in administrative terms. So we've seen in the last few weeks, the discussion through the Windrush affair, about the hostile environment. And London cannot be open at the same time as central Government is pursuing a set of policies designed deliberately to make life as unpleasant as possible for people who happen to be from elsewhere, or happen not to have precisely the right papers at the right time. So there's a set of challenges there around policy. And thirdly I think we have to remember that an immigration policy that worked for London and indeed the country as a whole, isn't one that just focuses on very highly skilled or highly paid immigrants. London depends on migration of all levels, all salary levels, all skill levels, and we need to have a policy that recognises that, that's as fluid and flexible as possible. END OF RECORDING Title: Brexit London interviews Richard Chaplin Duration: 0.40 mins Speaker: Richard Chaplin I think the first area is people - the professions are people business service industries, so people businesses, and access to talent is probably one of the most important areas. Now that's 2 ways, it's access to people who want to work from - come to the UK from EU 27, but it's also are you able to send your people out to clients in EU 27? And the research we've conducted suggests that quite a lot of people will now be using their European offices to serve those clients, who are in EU 27, which is obviously bad news for the UK cities where those people would otherwise be based. END OF RECORDING Title: Brexit Leeds interviews frank high Duration: 0.54 mins Speakers: Frank van Oort The 3 Northern regions I wanted to attract [FDI? 0:04] as they did in the past, continue doing that in the future. Would mostly have to focus on skills, skills of labour, skills of human capital. But should also focus on research and the development of firms and they are pretty good at it. But as I was mentioning today in this workshop before, people tend to focus a lot on Brexit, accessibility issues, and not so much on human capital and other things, which were important in the past, and will remain important further on. And I think they should still focus on that - investing in universities yes, invest in people. And that will in the end give them a competitive advantage. So other regions in Europe who invest in exactly the same thing - so you have to keep up with these issues in order to be competitive. That was one big sentence! Can you get something from that? END OF RECORDING Title: Brexit Leeds interviews katie high Duration: 3.22 mins Speaker: Katie Schmeuker Well I think the withdrawal from the EU structural funds is actually one of the big opportunities of leaving the European Union, but it's also an area of risk. And if we look at what's happened with urban policy in recent years, particularly over the last 8 years, what we've seen is a real focus on those large metropolitan areas of the North and the Midlands, places like the West Midlands, Greater Manchester, the area around Leeds. But actually the EU structural funds has been one of those few remaining pieces of policy that has offered something of a lifeline to those places that have been slower growing, and to those that have been left behind. And actually those places that were the most likely to vote to leave the European Union, and as we heard at the conference today, a lot of that was about an expression of the dissatisfaction about what has happened in terms of economic growth and the unevenness of economic growth and opportunity across the UK. And it's simply not right that there are some people who are locked out of opportunity as a result of those patterns of growth. Now, by leaving the European Union we do have an opportunity to take those EU structural funds, which are currently not very well targeted, an absolute nightmare to administer, if anyone's actually tried to do so - and actually we can improve that policy area if we make it more targeted, if we make it a flexible fund that focuses not only on how to grow enterprise and investment, and investment and infrastructure on the one hand, but actually connect that up to the skills and training programmes that will enable people currently experiencing poverty to be able to actually access those opportunities. If we can get that right, then that is actually one of the opportunities of Brexit, that could help us to begin to deliver an economy that works for all. But, in order to do that, we need to make sure that the policy is well funded. At the moment there's over a billion pounds a year that goes into EU structural funds being spent in the UK. Around about 2 and half billion pounds per year, if you include in that the match funding that's also required. So that's a big chunk of money. We need to make sure that's secured, and we need to make sure that the policy is designed as part of what the Government calls its UK Shared Prosperity fund, actually does enable places to connect growth to economic opportunity to ensure the prosperity does work for all. I think the research that's been done - it's looking at that really sort of detailed and granular look at what's going on with the way in which goods and services move across borders as we combine different elements from different places to create goods and services in a modern economy. I think that's really, really important insight. And again, the work that has been done around competitiveness, I think provides really important insight. The challenge now I think, is how do you use those insights in setting economic growth and development policies at that sub regional level in the UK. We have minor authorities and mayoral authorities, and local enterprise partnerships across England whose job it is to grow the economy, and they need to understand the implications of that research, in order to be able to think through what some of the impacts on Brexit might be on their area. And what the implications are then for how they need to be prepared. END OF RECORDING Title: Brexit Leeds interviews longlands high Duration: 2.18 mins Speaker: Sarah Longlands I think there's a number of issues with the withdrawal of EU structural funds following Brexit. First of all, the EU funding that we've had in the UK, particularly in the North of England, has provided a coherence around regional economic development. So it's not just about the funding, but it's about the structure and governance that that has provided, in terms of guiding, and providing a strategic overview how funding should be used to best support those place where market failure is occurring. So that's the first thing really, that sense of a regional structure for how regional development should take place, and the potential opportunity cost of losing that in a post Brexit scenario. The second issue is that we've seen a lot of discussion about what might replace the structural funds. Talked about the shared prosperity fund that was announced in the Conservative manifesto. But as yet, there's very little detail about what that actually means and how that will actually play out. I would like to hope that that is not simply a competitive process, where places are pitched one against the other, in order to draw down that funding. I would like to see a strategic approach to that, which recognises the particular needs and challenges of different types of places. Because if it is purely a competitive process, then those places that are ready, well equipped and well able to respond to funding proposals, will benefit most, because they have the additional capacity and the additional data necessary to make their case. So I would like to see a much more strategic and grown up approach to distributing that funding to meet the challenges of places in the North of England. I'm particularly keen that the funding should not just be focused on the core cities if you like - from our research that we did in 2016 we know that there are many places outside the core cities that are actually growing at a faster rate. For example, places like Durham and Warrington, and it's important that policy makers, through whatever funds come out of the shared prosperity fund recognise the value and importance of places that are not the core cities, because they too are home to tax payers, and they're also some of the places that voted for Brexit. So it's really important that we respond to the challenges and issues that they raised through their vote to leave the EU. END OF RECORDING Title: Brexit Leeds interviews mayor high Duration: 1.57 mins Speaker: Mayor Steve Rotherham I think the difficulty for all of us, is that we really don't know what's going to come out of the negotiations, and so we're trying to second guess what the opportunities might be for us. In a western facing port like Liverpool, with the deep sea connection, which is called the [Post Panamacks? 0:16] facility at Liverpool, and historic trade links with America. So we're being slightly more positive than other areas, and despite I think the fact that we will be hit hard by post Brexit issues, like anywhere else, I think there are - or there is the potential for us, to open up new trade deals and to look at what we can do in regard to those historic linkages that we have with North America especially, for across the further globe. [researcher reads a question out, but can't hear it because not near the microphone] Well I think it's an important thing for us isn't it, to get a baseline, and then we can see what the detriments of Brexit may well be. Or, potentially, in years to come, how far we've been able to recover - because I do think there will be after shocks, after Brexit has happened. And they will hit areas like ours, but working class areas particularly hard, and then it's what we can do to really build on those. And therefore the information that's been gathered here and at the other events that have been going on around the country, will be fantastic for us as contemporary evidence of where we currently are, but also of what we might need to do to adjust to the opportunities that Brexit could have for a western facing port like ourselves. END OF RECORDING Title: Brexit Leeds interviews mccauley high Duration: 0.48 mins Speaker: Glen McCauley I thought it was really good actually - I suppose it's not quite what I was expecting. I thought it might be a bit more sort of technically based, so how you undertook the research, and what the impact was. I think because we're in West Yorkshire, I think the piece around devolution - I really wasn't expecting. And I think that fact that it's actually brought to life a whole load of issues, that has made me think about devolution in a sort of completely sort of deeper way really. I think the point of saying that this is sort of crystallised, and shining a light on a whole load of structural things that are wrong in our economy, and Brexit is just something that has actually brought this to life - I think was really good. END OF RECORDING Title: Brexit Leeds interviews pike high Duration: 2.03 mins Speaker: Andy Pike In terms of the post Brexit economic development challenges, here is where we see a curious thing, which is really the aggravation or amplification of a lot of long standing and persistent problems that the North of England has faced. Issues around connectivity and infrastructure, poor skills, weak innovation performance, a highly centralised governance system. And to a degree, a lack of growth enabling public sector investment over the long term. So, in many ways, Brexit is kind of amplifying or intensifying a lot of these issues, which we've been having to face and grapple with, with local, urban and regional policy in the North for many decades. The crucial issue here really in terms of the UK's industrial strategy, is the extent to which it can knit together a vertical kind of central focus on key growth sectors for the future of the UK economy and for its cities and regions, with an understanding of place and how sectors kind of intersect with territorial issues. Be that a city regional or city regional level. I mean these will be fundamental in the sense of trying to connect the national ambitions of the Government in terms of rebalancing the economy, and spatial and sectorial terms. Also, spreading wealth and prosperity across the UK. The place dimension is a fundamental element of that approach and those policies. So crucial things will be trying to decentralise in ways that provide powers and resources to institutions on the ground, to be able to address these kinds of structural issues in cities and regions across the North and beyond. But also as well, trying to have the autonomy and discretion to be able to design policies that are more tailored to particular local predicaments. You know, if there are issues around innovation, then how can they best connect universities together to try and retain graduates in the region, for example. Yes, it's been very enlightening. The research that's been undertaken by the team led by Birmingham, instilling important timely and very important research providing some genuine evidence on the potential impacts of Brexit, on urban and regional development in the UK and beyond. END OF RECORDING Title: Brexit Leeds interviews Richard Corbett mep high Duration: 2.54 mins Speaker: Richard Corbett They are multiple, but they are very difficult to assess precisely at the moment because we still don't know what, if we go ahead with Brexit, what exactly the deal is going to be. In the news recently, it has been, for instance, issue of what kind of customs arrangements we would have with the EU. The Government still hasn't got its opening negotiation position on this, 2 years after the referendum. But that's crucial. Will our manufacturing sector face customs checks and border checks, and paperwork when dealing with their main export market, for instance? This is also an agricultural region. We don't know what's going to happen. Will our farmers still be part of a European wide agricultural market with agreed levels of subsidies across Europe to farmers, or not? That's crucial for an area that exports a lot of its agricultural products to the rest of Europe. Will our universities be torn out of EU research cooperation or not? That's not been settled or negotiated. What's going to happen to the Humber ports? The Humber estuary is our export highway, pointed to the heart of Europe. Are they going to have to start building customs facilities, and have huge lorry parking spaces to avoid operations stack all the way down the motorways? We still don't know. What's going to happen to our financial sector? Important in Leeds, Halifax and elsewhere. If they lose their rights to passport insurance and banking services across Europe, as they do now. We still don't know. All of these have the potential to go catastrophically wrong. And that in the context, where frankly almost every day, you discover a new problem about Brexit. Things that we didn't know about before, things that we weren't told before. And it's not surprising that public opinion has not rallied behind the result, which is what everybody expected. It's not that at all. If anything it's edging the other way, with people saying mm, we need to be able to reconsider this question. Yes, I think these sorts of events are very useful, because it brings together the academics who study away at all the detail, practitioners, businesses, people working in local authorities and so on, who are all facing this challenge. And again, and again, every time there's a conference like this, you discover new problems with Brexit. Things that we didn't know about before. And it illustrates that the Brexit that we're heading to at the moment, with massive changes, has nothing whatsoever to do with the promises that were made by the Leave campaign or by Brexit ministers. It's looking very, very different and that's why people who voted Leave are perfectly entitled to say hang on a minute, this isn't what I was told, this isn't what we were promised. And it's damn well not what I voted for. END OF RECORDING Title: Brexit London interviews Andrew Carter high Duration: 0.48 mins Speaker: Andrew Carter So when the UK leaves Brexit, and we're in a post Brexit scenario, I think we're gonna need to see a governance structure that gives much more formal powers to our big cities in particular across England and indeed in Scotland, in Wales. So that's thinking about London, obviously already has a mayor, has a number of powers but he will need more. But it also means places like Greater Manchester, West Midlands, Greater Newcastle, Greater Leeds - those big cities, Glasgow, and Cardiff - I would like to see much more power and responsibility over issues around skills and transport and housing devolved away from Whitehall, and down into those localities. Ideally led by mayors, but not necessarily. So they can have some of the power and control in order to make a success of whatever the post Brexit scenarios are. END OF RECORDING Title: Brexit London interviews chaplin high Duration: 0.40 mins Speaker: Richard Chaplin I think the first area is people - the professions are people business service industries, so people businesses, and access to talent is probably one of the most important areas. Now that's 2 ways, it's access to people who want to work from - come to the UK from EU 27, but it's also are you able to send your people out to clients in EU 27? And the research we've conducted suggests that quite a lot of people will now be using their European offices to serve those clients, who are in EU 27, which is obviously bad news for the UK cities where those people would otherwise be based. END OF RECORDING Title: Brexit London interviews Ingo Borchert high Duration: 0.41 mins Speaker: Ingo Borchert A lot of service sectors that export to the European market use a number of ways to trade services. They trade services electronically across border, they establish commercial presence, and they send people to Europe or receive them as employees. The European legal framework supports this in a particular way. It will be very important going forward post Brexit. It will be important for British businesses in order to do so, and to do so in a competitive way, that the recollectory align - that the regulations are as much as aligned as possible for British businesses to continue to do so. END OF RECORDING Title: Jonathan Portes Duration: 2.15 mins Speakers: Well, London is a city that has benefited hugely from immigration, particularly over the last 20 or 30 years. It's been one of the big drivers behind London's growth. So keeping that going is going to be a real challenge post Brexit. Now, so far, we really have very little idea of what immigration policy after Brexit will look like. London's first priority is making sure that those European citizens, and indeed citizens from elsewhere in the world, who are already here, feel welcome here. Feel, that just because of Brexit, London isn't going to turn its back either on Europe or the world. So it's important communication job, both for the Mayor and the GLA, but also for business, for services and so on, in saying to London citizens, London is still a global city. It's still going to be a global city, and we want people from elsewhere, we depend on people from elsewhere. So there's that. The second point will then be to try and shape our future policy, our future policy towards immigration both from Europe and the rest of the world, in a positive direction. That means lobbying central Government and building up a political pressure to pressure central Government into having a relatively liberal regime. Now it's liberal both in policy terms, in terms of saying who can come here, both from Europe and elsewhere, and who can't, but also in administrative terms. So we've seen in the last few weeks, the discussion through the Windrush affair, about the hostile environment. And London cannot be open at the same time as central Government is pursuing a set of policies designed deliberately to make life as unpleasant as possible for people who happen to be from elsewhere, or happen not to have precisely the right papers at the right time. So there's a set of challenges there around policy. And thirdly I think we have to remember that an immigration policy that worked for London and indeed the country as a whole, isn't one that just focuses on very highly skilled or highly paid immigrants. London depends on migration of all levels, all salary levels, all skill levels, and we need to have a policy that recognises that, that's as fluid and flexible as possible. END OF RECORDING Title: Brexit London interviews Tony Travis high Duration: 1.36 mins Speaker: Tony Travis The key post Brexit economic challenges for London include migration - London's a city of mass migration, true with a number of cities across the country actually - but the economy has relied on a flow of people from the rest of the world and the rest of the UK, and it will need to continue to do that. I think beyond that, the question of how the Government's negotiations deal with financial services in particular, major industrial sector for London - the way that turns out as well, I think will determine how well the London economy continues to do. And certainly, to judge whether it's done as well as it has in recent years. Well, the Government's published a national industrial strategy - broad, but there it is. Lots of local areas including London, the Mayor of London, have responded and are indeed responding to the imagined changes that will occur as a result of the UK leaving the EU. And of course it's helpful that the Government has got this far. I think the challenge now, particularly for Government is to come up with a series of more detailed policies over issues like migration, like skills, that allow the UK economy and London within it, to continue to flourish, given at the moment, that it's hard for sub national areas to know exactly where the negotiations are going. So they need to know a bit more about what's gonna happen in order to come up with sensible local planning that responds to that. END OF RECORDING Title: Dan Wincott Duration: 1.08 mins Speaker: Dan Wincott National and local regional responses are critically important, and industrial strategy, the bridges, the national and local levels, is a vital element of a full response to Brexit. But getting the 2 levels to work together, that's a challenge, and that's a challenge that will need to be met if we're gonna have the best possible economic results after Brexit. The UK is still one of the most centralised advanced countries in the world. Devolution has got to be a major part of the response to Brexit if it's going to be met effectively. But the UK faces major challenges in pursuing a devolved system of governance and policy making, that is coherent and transparent within England, across England and across the UK as a whole. And those challenges are probably as powerful as the economic challenges of Brexit themselves. END OF RECORDING Title: David Bailey Duration: 1.00 mins Speaker: David Bailey What was great about today's event, and also the research that's been done as part of the project, is to show how exposed the West Midlands is to Brexit, particularly through the linkages through supply chains that trade internationally. So, whatever comes out of this I think, is the need for much more in the way of devolution, down to the local level and the regional level. Not only to be able to cope with Brexit, but also to get hold of some of the big challenges and opportunities that are coming up. So I want to see as much as possible in the way of devolutions, so that we can have a much more of a regional scale industrial strategy. I'd actually like to see a federal Britain. I'd like to see real devolution of powers, resources, competencies down to local level, so that we can devise the training strategies that we want locally, so that we can intervene to support companies where we need it, and to be able to make the big decisions over things like infrastructure and skills. So as much in the way of devolution as possible, down to the local level, and not so much of this kind of fragmented form of LEPs combined authorities, Midlands engines that we have at the moment. So much more full scale devolution. END OF RECORDING Title: David Heald Duration: 6.11 mins Speaker: David Heald The fundamental problem that nobody anticipated in 1998 when the UK got devolution in Scotland, Wales and Northern Ireland, was that the UK in time might leave the European Union. The devolution settlement was very different in the 1990s from what was anticipated in the 1970s, in that essentially it was a model between powers that were devolved and that powers that were reserved. But the essential point was that anything that not actually explicitly reserved, was devolved. Now that was actually very important in certain contexts like agriculture and fisheries, where the European Union set the framework. So the European Union set the framework for policy within significant areas in terms of for example, state aid, agricultural support, certain kinds of economic development, fisheries and such like. And what actually happened is that within that framework one can extensively devolve the essential administration of those policy areas to the devolved administrations, because the framework was a common European Union framework. What nobody anticipated is that the United Kingdom would leave the European Union, with the result that one would need a separate United Kingdom framework, within which to operate. It is not in the interests of the devolved nations to have a competition for state aid subsidy for agricultural subsidy or for fisheries policy, between the different parts of the European Union. The problem is, that the United Kingdom government particularly since 2010, tends to see the devolved administrations as essentially inferior to itself. And rather than being willing to work on a common framework that is agreed between the governments, the United Kingdom government regards it as something that is not that important, but which it will actually impose on the devolved administrations. And essentially that's why it was described, the UK policy was described by the Welsh and Scottish governments as a power grab, and why the Scottish government continues to refuse to agree to put a consent motion in front - legislative consent motion in front of the Scottish Parliament. In terms of what actually happens to the expenditure which has been funded by Europe out of the common pool of European funds, in terms of what actually happens, happens after Brexit, the important point is that that expenditure is very unequally distributed across the nations and regions of the United Kingdom. It is much more important, for example in agriculture, to Scotland, Wales and Northern Ireland, and it is on average to England. So that raises the question of how the repatriated expenditure is deal with. Now, I don't have a great deal of policy competence in the areas - my competence is very much in terms of the financial issues and the public finance matters. There are various models that one could operate, but all those models depend on a very informal system of internal United Kingdom financial management. So for example, the money that is now spent in Scotland, Wales and Northern Ireland on [03:38] repatriating, could be put into the Barnet formula, which is the mechanism for distributing funds between - distributing increasing funds between the different parts of the United Kingdom. There's obviously a question about policy control. If policy control was retained at the United Kingdom level on those areas, the devolved administrations will actually have no policy control over what the additional expenditure in their nations and regions actually is. So one has to think about how the policy allocation relates to the question of question of funding. Now the money could go into the Barnet formula, to just be part of the general pool of money which the Parliament's got to spend. But the important point to remember, is that will then create tensions with those devolved poly-tiers between how much we spend on nurses for National Health Service, and how much you can spend on sheep subsidies for farmers. So some issues that were resolved externally through the devolved nations, are actually going to be very important. The alternative financial model you could adopt - so for example, it could be managed at the UK level, in terms of what the Treasury - like the United Kingdom Treasury calls Annually Managed Expenditure, whereby any expenditure in the devolved nations within the framework of the UK policy, will actually be funded by the Treasury out of this pool of money held at the Treasury. It could either by held at the Treasury as Annually Managed Expenditure, or it could be essentially devolved in administrative terms, so devolved to administrations. So there's a question about who controls the policy and actually who controls the money. The essential point however, is the difficulties are political, because of the challenge to the devolution settlements at 1999, that is actually created by Brexit, and by the attitude of the United Kingdom government. So essentially, people are talking - we're talking ourselves into a constitutional crisis, which in the short run will unquestionably be won by the United Kingdom. But one doesn't have much idea about what the potential consequences will be for the future integrity of the United Kingdom, if the devolution settlement is seen to be rolled back. END OF RECORDING Title: Des McNulty high Duration: 2.01 mins Speaker: Des McNulty I think Scotland is at an advantage and at a disadvantage in relation to Brexit. The advantage is it's got a devolved government that can actually respond to local needs. And really begin to focus on immediate issues that affect that jurisdiction, something that isn't available to some other parts of the UK. On the other hand, because there are tensions between the devolved government and the UK government, and the devolved government don't have full powers over what's happening, then in a sense, there's an interaction between the devolved government and the UK government which is in a sense, at second hand. So you know, devolved government's I think find themselves a bit of difficulty - they've got responsibility and they've got powers, but they haven't got control of the situation. So they're having to adapt to these circumstances. Another issue which I think is really important is the relative scale of devolved governments relative to UK government in terms of capacity. Whereas the UK government might have a hundred civil servants operating in the specialist area of agriculture, the Scottish government might have 5 or 6. But they might have similar kinds of responsibilities. So the scale of operation isn't necessarily, you know, parallel to the scale of the jurisdiction or the scale of resources available. So the impact of the major changes that Brexit's going to bring about, could be potentially disproportionally impact on devolved governments, because they are smaller and have less capacity to adapt and to introduce new frameworks, new legislation etc, etc. So I think partly it's an advantage, because they've actually got, you know, some functionality there, but they're also at a disadvantage relative to the UK as a whole, because the functionality that they've got doesn't match that of the UK government. So, it's a bit of swings and roundabouts situation for them. END OF RECORDING Title: Jonathan Price Duration: 2.15 mins Speaker: Jonathan Price I think in many ways the key economic development challenges that Wales will face in the post Brexit world are similar to the ones they faced in the past. I think the best analysis that we've got, suggests that the consequence of Brexit will be a lower rate of economic growth than otherwise. Lower tax revenues to the UK Government, and lower revenues for the Welsh Government as a consequence. And therefore reduced money to spend on public services. I think that will exacerbate existing challenges for the Welsh Government, in terms of delivering good public services. The extent of that problem will depend very much on the nature that the Brexit settlement eventually takes. So I think we can see quite a divergent range of outcomes from a relatively modest impact, if you retain a high degree of access to the single market and customs union, through to quite severe impacts if we don't. So I think in many ways the nature of the challenge is very much up for grabs. I think the underlying problems that we face however, in terms of our economic structure, promoting faster growth, are exacerbated but not fundamentally changed by Brexit. Of course it's true that certain industries will be adversely affected. Some more than others. But, I think people often neglect the extent to which in the normal course of economic development industries, some industries grow, others contract. With this ongoing process of churning the economy, the economy in Wales now looks very different than it did 15 or 20 years ago. And yet many of the economic development challenges remain the same. And I think fundamentally, they remain challenges about our skills base, our connective infrastructure, and I think a lot of the other things that consequent on those fundamental challenges. In a way, it's quite a difficult answer because a lot of the challenges are about delivering effectively in these areas. And I think there's really a risk of sometimes being seduced by new and rather attractive theories and proposals, which often lack any substantial evidential support. I think we've seen a wave of fashions really in economic development, which have had very little impact on the relative standing of the UK countries and regions. END OF RECORDING Title: Lloyd Broad Duration: 2.34 mins Speaker: Lloyd Broad I think the key challenge that we face is the ability to foster appropriate devolution down to local level. Brexit's gonna flag up a lot of challenges, and what local government needs to do, and what a range of partners need to do is be able to tailor local solutions to the problems we have. Funding is one of those key policy challenges. We will lose an awful lot of money that cities benefit from, in terms of responding to business support opportunities, employment skills, as well as environmental and other low carbon matters. And that needs to be replaced appropriately, and needs to be local flexibility, and the ability for local government and its partners to respond accordingly. Inclusive growth is another issue that we need to address. There is a local of neighbourhood policy, neighbourhood renewal policies in the country, and we need to build place based holistic solutions to the problems that we have, whether that is around supporting productivity, whether it's around driving the skills that we need for the future, whether it's around uplifting workless, unemployed people. We need inclusive growth to create a future post Brexit environment that works for all, and not just the few. The workshop was really helpful for me. I'm not an academic, and we had a number of academics today that have shared an awful lot of insight, research, knowledge, data, which isn't easily and readily accessible. In the last 2 years, or almost 2 years since we chose to leave the European Union, people ask people like me in local government what's really going to be the impact of Brexit? What does it really mean? And it's really difficult to give them an appropriate amount of evidence which is focused on the unknown. Nobody knows what will happen post Brexit. So there's been a dearth of real quality data that can support possible scenarios of what the future may look like. And then we're planning - when we are planning in local government terms for preparing our business, preparing our people, preparing our communities for what life will be like outside the European Union, we need to have a much better understanding of what those impacts can be, so we can mitigate against it. And we can lobby governments in the context of devolution, and localised industrial strategies, do the best thing we can to prevent or mitigate against those negative impacts. So today what it's told me, is that there is a raft of evidence that's been gathered over the last 2 years, that can help us. There's local government policy makers, make some key decisions moving forward to respond in the appropriate way. END OF RECORDING Title: Nigel Driffield Duration: 1.51 mins Speaker: Nigel Driffield The West Midlands has done very well over the last 10 years in attracting foreign investment. It's been largely around 2 sorts of sectors. Firstly, the sorts of sectors that bring high levels of technology with them, the high tech companies. It doesn't generate very much in terms of employment, but it adds hugely to local productivity. At the other end of the scale, you have sectors like perhaps logistics, or food, which is great for the region because it generates large numbers of jobs, and typically for people who were unemployed or under employed before, but they tend to be relatively low skilled jobs. So, in a post Brexit world where does that leave us? Well, if we are going to be challenged on exporting and there is going to be less intrafirm trade, that is bits moving between Europe through supply chains, there might be less need for logistics firms. Equally, logistics firms might become lorry parks as holding goods for people who are trying to clear customs. So there might still be scope there. The food industry is largely for domestic consumption, not wholly, but largely so. That depends on the nature of the food industry post Brexit, with changes to the common agricultural policy and so on. The big challenge is at the top end. If you think of what I said, the sweet spot really is advanced manufacturing, because advanced manufacturing is high tech stuff and it employs people. And the big challenge is how we are going to retain that, where we have supply chains that cross into and out of Europe, where the value proposition for this region has been come here, as a bridge, into Europe. And that is going to be the big challenge. END OF RECORDING Title: Paul Forrest Duration: 1.29 mins Speaker: Paul Forrest Well the biggest challenge is gonna be how we secure access to the EU market [00:07] leaving the EU, and not leaving Europe and therefore we'll still be one of the most important trading partners. And the 3 key markets are the Netherlands, Germany and France, and we need to look at how we secure connectivity to those areas. In addition, we need to look at how the trading negotiations accommodate the manufacturing sector and the value added supply chains within the manufacturing sector in the Midlands, but also just as critical are the service sector industries in design and IT and augmented reality, that helps support the manufacturing sector. And that's about nearly 10% of the regional economy, is what we would call manu services - or services sector industries that are wholly or partially dependent on the manufacturing sector. And that's gonna be a key component of growth as we move into industry 4.0. And so we'll be looking to have that sustained. But on a wider context and a global context, we need to be looking at international connectivity. Both in terms of access for rail, and also access on airports, by airports, to a major market. And also making sure that we look at the sea connectivity, because obviously that's a key component, merchandise exports, and the links between the West Midlands and its key export ports. Say, Hollyhead, Liverpool, Hull, and [01:28] to see how we move forward. END OF RECORDING Title: Phil McCann Duration: 3.05 mins Speaker: Phil McCann I think that the national and local and industrial strategies - this new approach to industrial policy, potentially offers some significant advantages for different parts of the UK. The most important point though is to allow localities where there's devolved administrations, to the regional areas, labs, whatever the geography is, to try to get to grips with the realities of the locality, rather than just thinking in national numbers all the time. Our policy settings in the UK are far too centralised, far too top down, far too aggregate in nature, and also in terms of thinking. And this is the way to empower local actors, stakeholders, to come together to work together, on the local problems as they understand them. They know what the bottlenecks are. They know what the challenges are. And it's their responsibility to try and come up with what are potentially, workable and feasible solutions. Importantly here, we need consensus and working across political boundaries. We need people from all political parties, different types of stakeholders, coming together to try and find local solutions for local problems. The withdrawal of the European funding particularly in regional and admin policy, cohesion funds, is going to be a major issue for many parts of the UK. The level of funding that many regions, particularly economically weaker regions have received over the last 3 or 4 decades has been enormous. It's tens of billions. And the key things of the EU policies has always been that - it's about integrating long term, joining up policy streams for long term investment. So the kind of replacement that we will need to see in the UK, the principles would be firstly, we need to have polices and programme that explicitly target the weaker areas. Secondly they need to be long term, going beyond individual electoral cycles, whether on a local or a national level, so that you don't get changing of policy, changing tack. There needs to be continuity, so private sector and public sector bodies can genuinely get involved. Thirdly, what we also need to see are programmes which allow flexibility. Local decision making, local management, shared management where local has to work with national government, but also many areas where local and regional operate largely independent of national government. We don't want in the end top down thinking, where Whitehall are always overseeing and looking at what local and regional authorities are doing. It's the wrong way around. We need to develop much more of a bottom up system. The fourth element, which is really important, is we need the fire power. The kind of issues we're talking about, local economic development, and the challenges are enormous, particularly in the post Brexit context. And what we need is a policy system which has the resources to make a difference. We can't see anything which kind of scatters resources between places, too fragmented, too small scale, because we also know from our own work in this programme, in this project for changing Europe, is it's the economically weaker parts of the UK which are more exposed to Brexit. So they're going to need an enormous funding target, enormous fire power - that's the kind of language I would use to make sure that those regions can best respond. END OF RECORDING Title: Shane Murphy Duration: 3.03 mins Speaker: Shane Murphy Obviously from a Northern Ireland perspective, the key issue is around the border, and what the resolution is to that. At the moment, there is no resolution, and the final resolution we can't really be clear as to what exactly those impacts might be. Certainly there is an agreed desire to maintain the frictionless border. And in terms of frictionless border, that has a set of interlocking implications for the movement of people on a day to day life - movement of workers, the movement of goods, the delivery of services. All of those intertwine together. And in some respects, a lot of what is effectively local trade, in border areas, which just happens to have an invisible international border down the middle of it, and this has a lot of implications for Northern Ireland, depending on the way it is solved. And certainly on the face of it, there are a number of objectives that need to be solved - it's maintaining this frictionless border, not having any implications for the UK internal market, while at the same time, respecting the EU's norms and rules around the customs union and the internal market. Clearly solving this is - is gonna take a lot of brain power, and some innovative thinking. Clearly the EU side and the UK side are not there, at a single solution. And until we get to that single solution, or until we start to see them zeroing in, and around a common solution, it's very difficult to predict the impacts, because the impacts could be really very different depending on what actually comes out. In terms of devolution and the balance of powers between central Government and devolved administrations, there is also an angle for Northern Ireland as well, and around the border. The debate within the UK has been about whether powers repatriated from Brussels, whether they're appropriately balanced, and whether sufficient powers are going to devolved administrations. Again, depending on how the border question is solved, there could be implications for Northern Ireland, which might in some cases imply a additional powers. Certainly some of the options that are on the table at the moment, or seem to be discussed at the moment, would seem to imply additional levels of devolution, perhaps to make them workable. One example would be the so called, albeit controversial, albeit the EU's version of the backstop, but certainly that text would seem to imply greater levels of devolution than currently. How all that works out no one knows, but again, it seems to be that however it works out, there could be potential implications for devolution. END OF RECORDING     The economic impacts of Brexit on the UK, its regions, its cities and its sectors 98