Professional services firm EY has combined publication of its new study The Thames Valley – a Framework for Growth with a call for business leaders to come together and provide joined-up thinking on the region’s priorities.
The Thames Valley needs a clear voice, says EY, which has taken on the challenge of driving debate on how to achieve sustained medium and long-term economic growth.
Historically, such a voice was perhaps unnecessary. After all, the Thames Valley has enjoyed decades of prosperity. That upward trajectory should continue, for now at least. EY predicts that the Thames Valley is due to be the UK’s fastest-growing region over the next three years, with growth of 2.3%. This compares with 2.2% for London, 2.0% for the broader South East, and the UK average of 1.8%. But EY’s study raises a note of caution.
“What we are trying to do is act as a catalyst and offer a framework for a debate about whether an integrated plan of action would help drive economic growth for the benefit of business and communities in the Thames Valley,” said Richard Baker, EY managing partner, Thames Valley and south. “Feedback so far from business leaders is that what the study has done is bring together a set of messages that everyone has been feeling, but no one has articulated yet in a joined-up way.”
EY’s concern is that doing nothing is no longer an option. The study looks at the main threats to the region’s economy of cost and congestion, along with the risk of complacency. It outlines three key enablers for economic growth of productivity, innovation and competitiveness, and links these to five dimensions (see chart).
“Our view is that unless the Thames Valley starts behaving more like an economic region, with more action taken to move forward on a region-wide basis, then we are not going to deliver the growth we are capable of,” said Baker.
There is a positive mood by businesses to act, according to David Rutherford, EY’s head of growth markets, Thames Valley. He said: “When we started our research and discussions with businesses one thing that came out very clearly was how much the community cares about the region. Without care, we won’t see action, and without action progress can’t be made.”
A sense of identity
The lack of a plan covering all of the Thames Valley makes it difficult for central government to assess what support it should provide to the region. And that could be to the detriment of the UK, noted Baker: “Given the broader context of global macro-economic drivers and Brexit, the Thames Valley is a really important portal for the UK’s success. Our region has a multiplier effect.”
With no recent history of the Thames Valley under-performing, it is hard to know what might happen if the region faltered. Rutherford said: “Quite rightly, the Government focuses on supporting economic growth in key parts of the UK. We are saying it should not be banking on the Thames Valley’s performance – it needs to allocate some of its capital here to sustain growth.”
Unexpected demographic trends
The study identified some interesting demographic trends. For example, the Thames Valley has more than the UK average for the number of school and further education students, and more people aged 30-45. However, EY noted that the region has a lower than expected proportion of people in their 20-30s. That means the Thames Valley is light on millennials, the digital natives driving the Fourth Industrial Revolution.
“This was a surprise,” said Baker. “Part of the reason could be cost, particularly housing. It is creating the challenge of a shortage of talent, especially given the low levels of unemployment in the region.”
Another unexpected trend was that while the Thames Valley has plenty of entrepreneurial talent, the age demographic is towards older, more experienced people – the ‘grey entrepreneurs’. Typically, they have had successful careers and are now seeking other ventures.
Education underpins success
The study brings out the important role universities play in the region’s economic success. “We have a heady mix of corporations, entrepreneurs and universities. We need to find ways of making much more of these linkages and collaborations,” said Baker.
For example, while Oxford has a global reputation for research, the university’s world ranking in terms of the number of spin-out businesses it generates is not particularly high, noted Baker. “With greater business collaboration, Oxford has the opportunity to create a MIT (Massachusetts Institute of Technology) effect,” he said.
In calling for a unified voice on priorities, Baker outlined two actionable steps that organisations could take. One is to tackle the problem identified by businesses that the education system isn’t producing joiners who are as ready as they would like them to be.
“Businesses don’t need to wait for the education system to change. We can take action now to engage more with schools and universities to inspire students by demonstrating the range of careers available, and help them to understand the skills and capabilities they may need,” said Baker.
Another important step is for employers to improve the way they develop the talent, skills and capabilities of their existing workforce, especially to handle the requirements of the Fourth Industrial Revolution. “As an employer ourselves we face this issue. EY partners with the Henley Business School to offer higher-level apprenticeships in the workplace as part of our life-long learning approach,” noted Baker.
Call for a business action group
The Thames Valley could follow the lead of cities with elected mayors that are forming senior-level business advisory groups. “We have started informal discussions with business leaders at roundtable events to test this idea. If businesses set out their priorities, and stand up and be counted, then we can move towards defining and ranking the priorities for the Thames Valley,” said Baker. “We believe an advisory group looking at business priorities could be a logical next step.”
He concluded: “We are confident about the value of joined-up thinking and that the business community cares about the future of the Thames Valley and wants to engage. The uncertainty at the moment is how much do we care and how can we translate this into some form of action. We hope our study provides a useful framework for discussion and setting priorities,” said Baker.