Government plans to stimulate the economy through regional initiatives, such as the ‘Northern Powerhouse’ and ‘Midlands Engine’ are failing to make an impact on UK SMEs, according to research from Bibby Financial Services (BFS).
According to data for Q2, collected from over 1000 SMEs between 25 May and 22 June, the majority of UK SMEs (66%) are unaware of the Midlands Engine and 43% are not aware of the Northern Powerhouse.
The Northern Powerhouse and Midlands Engine initiatives were two hallmarks of the Cameron-Osborne government, both intended to create a more balanced economy by driving regional growth. However, the initiatives have been characterised by stop-start progress, hampered by the political change brought about by the EU referendum and general elections in 2015 and 2017.
The research finds that a third of businesses in the North West (32%), a quarter (25%) in the North East and 31% in Yorkshire and Humberside have never heard of the Northern Powerhouse, despite government aims to engage with “businesses and others across the North to consider what more can be done to support the delivery of the Northern Powerhouse.”
The picture is worse still in the Midlands. More than half of SMEs in the West (51%) and East Midlands (56%) are unaware of the Midlands Engine or how it may benefit them.
Edward Winterton, UK chief executive of Bibby Financial Services said: “Measures that aim to close the economic gap between the rest of the country and the South can only be a good thing. For this reason there has been much hope placed on the Midlands Engine and Northern Powerhouse strategies to drive regional economies through focused investment and skills development.
“Such strategies, however, are currently on unsteady ground. Over a quarter of SMEs in the North are unaware of the Northern Powerhouse and more than half of those in the Midlands have not heard of the Midlands Engine. This demonstrates a distinct lack of awareness from small and medium sized businesses the Government wishes to benefit.
“It is vital that SMEs in these regions see tangible benefits from the billions of pounds that have been earmarked, but this must start with awareness of the opportunities available to them and an understanding of how they can benefit.”
Of SMEs aware of the strategies, there is a feeling that investment focus is skewed in favour of the regions’ larger cities. A third of UK SMEs believe that the Midlands Engine is too focused on Birmingham and 40% think the Northern Powerhouse is too centred on Manchester. The research also reveals that SMEs across the country (66%) believe that there is too much investment into London when compared with the rest of the UK.
Winterton added: “The UK very much remains a London-centric economy, but we must redress the balance if we are to create an economy that works for everyone across the country. Improving connectivity, investing in skills and development and creating the right environment for enterprise to thrive and grow are vital in supporting regional economies.
“While Brexit negotiations are clearly a priority for big and small businesses alike, it would be unwise for the Government to neglect the regional strategies on which it once placed so much emphasis.
“Such measures proposed as part of the Industrial Strategy should not be side-tracked by Brexit negotiations but instead form part of these important discussions.”