The Business Magazine - B2B Business News - Site Logo
The Business Magazine March 2024
Read now
PICK YOUR EDITION

Thames Valley: EY launches integrated growth strategy for region

29 May 2018
Share
Finance

EY has launched a new report examining the Thames Valley’s strengths and economic growth prospects, calling out the need for an integrated and cohesive growth strategy if the region is to achieve its potential as the UK’s fastest growing economy.

Highlights:

  • The Thames Valley is the UK’s fastest growing region with forecast GVA growth of 2.3% until 2020 – ahead of London (2.2%) and the South East (2.0%).
  • EY’s report is a five-dimensional framework proposing an integrated approach for sustained economic growth of the region.
  • The region is well placed to thrive post-Brexit, but faces considerable threats to its future success – i.e. people skills and infrastructure challenges

The report identifies the opportunities, challenges and constraints for the Thames Valley as an economic growth region, centred around five dimensions: people and skills; infrastructure; enterprise and investment; quality of living; and governance.

As a thriving region, the Thames Valley is clearly in a strong position, with a growth forecast of 2.3% Gross Value Added (GVA) per year until 2020 – outpacing London and the South East with GVA growth per year of 2.2% and 2.0% respectively, and ahead of UK average of 1.8%, according to EY’s report.

However, there are huge risks in assuming that the region’s success is any guide to the future and the report says there are reasons for caution. EY’s research has found that growth is slowing more generally across the UK – this, coupled with increasing competition, rising housing costs and growing transport congestion, means the Thames Valley is facing considerable threats to its future success.

The report discusses the risk of complacency and proposes a polycentric approach as a key means of future-proofing the success of the Thames Valley for the years to come. That is, to bring together the region’s many communities and build on the existing specialisms and strengths of its towns and districts.

Richard Baker, EY’s managing partner in the Thames Valley, said: “The Thames Valley definitely has the scale, the growth opportunity and value to the wider UK economy, to warrant articulating a compelling growth aspiration. The region has much to shout about, from its cutting-edge intellectual property, to its higher education excellence and its sustained focus on data science and technology.

“This report demonstrates that there is an opportunity for collaboration across the region, between private and public sector, to build a cohesive and integrated plan to promote the Thames Valley and its growth prospects. We believe the region would benefit from a unified voice and a joined up approach if it is to achieve and sustain its growth potential as the UK’s fastest growing region. But we cannot be complacent – the region will not continue to thrive without an integrated and balanced approach to promote co-operation and growth.”

Brexit challenges around people and skills

Amid the ongoing uncertainty surrounding Brexit, action must be taken in the Thames Valley to both reassure investors and retain existing employers.

With 2.1 million residents and counting (two-thirds of whom are working age), the Thames Valley continues to experience a net inflow of people. The region’s working age population grew by 0.24% between 2015 and 2016, compared to a reduction of 0.2% for the UK average.

Long-term migration has been a significant contributor to that growth, as well as to the region’s diversity and skills mix. Brexit therefore remains a key concern and in particular whether the IP-rich sectors that underpin the region, including the universities, will be able to recruit and retain the relevant talent and skills.

A place to live well, but at a cost

The population of the Thames Valley benefits from a higher quality of living than the UK average, including higher average earnings of £35,811 compared to UK average on £28,296 and low unemployment levels of 3.4%, compared to UK average of 4.4%.

However, the region is burdened with some of the most unaffordable housing in the country.

In the UK as a whole, the average earnings-to-house-price multiple is 7.6. The Thames Valley far exceeds this at 11.8, with a number of regions – notably Oxford, Windsor and Maidenhead and Wokingham – exceeding the earnings-to-house-price multiple of London. The region will need to consider some trade-offs as it seeks to maintain the balance between quality of living and updating its infrastructure and housing stock.

Infrastructure dragging on growth

The Thames Valley provides access to the UK’s largest and busiest airport, with London Heathrow serving 75 million passengers every year. And with a third runway still potentially in the pipeline – a decision pending in 2018 – that capacity could yet be extended by a further 70%.

However, the Thames Valley is facing serious capacity constraints, with its roads significantly congested and its rail network overloaded. Thames Valley train stations serve on average 60 million passengers a year, with nearly half of that activity occurring at just three stations: Reading, Oxford and Slough.

In contrast, the Thames Valley has some of the highest-performing digital infrastructure in the UK. Average next generation (NGA) broadband availability stands at 84% across the Thames Valley, well above the UK average of 75%. In particular, Bracknell Forest, Reading and Slough all have NGA availability that ranks above that of Manchester, Birmingham and London. However, many businesses complain about broadband ‘weakspots’ where their offices are based, as well as limited mobile coverage across the region’s rural areas and transport networks.

Baker added: “A region’s prosperity – and future success – is ever more dependent on its infrastructure. The Thames Valley’s roads and rail network need to catch up with its strengths in digital infrastructure if the region is to best serve its businesses and residents.

“However, the region must shake off its complacency if it is to thrive post-Brexit and it’s positive to see future developments in the pipeline – Crossrail and a £27m investment from Highways England – that will link infrastructure networks and ultimately improve connectivity across the region.” 

Region faces a potential digital skills gap

Baker concluded: “The Thames Valley is well placed with its sector strengths to respond to digital disruption and thrive in the Fourth Industrial Revolution. The challenge for government, business and society is to find new ways of thinking and acting as our world continues to be disrupted by technology, science and innovation.

“There is a clear window of opportunity for the region to capitalise on its universities and its blend of local and international skills. Moreover, the Thames Valley has a chance to help the UK reshape its global trading position by taking advantage of the extraordinary opportunities afforded by digital and scientific transformation.”

See the report here


Related topics

Related articles

Upcoming events

view more
06
Jun

South Coast Property Awards 2024

Hilton Southampton
Utilita Bowl
More info
18
Jul

Thames Valley Tech & Innovation Awards 2024

Reading FC Conference & Events
Select Car Leasing Stadium, Reading
More info
12
Sep

Thames Valley Property Awards 2024

Ascot Pavilion
Ascot Racecourse
More info
03
Oct

South Coast Tech & Innovation Awards 2024

Hilton Southampton
Utilita Bowl
More info
07
Nov

Thames Valley Deals Awards 2024

Reading FC Conference & Events
Select Car Leasing Stadium, Reading
More info

Related articles