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Destination: Thames Valley
Centred on Berkshire, but stretching into south Oxfordshire and north Hampshire, it is difficult to identify its boundaries clearly. To the rest of the UK, it lacks a strong regional presence.
- By Bob Sherwood, Financial Times
- Published: 00:30 May 2, 2008
The Thames Valley has many faces. It is the M4 corridor of US companies, the rural beauty of the Berkshire downs, the history of Windsor, the affluence of Henley and Eton, the new town of Bracknell, the immigration of Slough, and the resurgent confidence of Reading.
Centred on Berkshire, but stretching into south Oxfordshire and north Hampshire, it is difficult to identify its boundaries clearly. To the rest of the UK, it lacks a strong regional presence.
But with a net contribution of almost £4 billion to public coffers, there can be little doubt that the Treasury at least is aware of the "sub-region's" attributes.
The Thames Valley has transformed itself in the past 25 years, and the changes are continuing at a pace. Taken as a whole, the sub-region is the most potent economic area outside London.
Jim Braithwaite, chairman of the South East England Development Agency, says: "It is the heart and soul of the British economy. The Thames Valley is the engine-room of everything we do."
Fuelled by the Heathrow phenomenon that brought US software and IT companies to a convenient location near London, the sub-region is now the hub for the ITC and life sciences sectors.
The statistics speak for themselves: higher than average productivity, almost 30 per cent of employment in the knowledge economy, a skilled but tight labour market and earnings almost 10 per cent higher than the south-east average.
Yet the perception of some Thames Valley towns still lags reality.
Slough is indeed the most ethnically diverse town in the UK, with the largest Sikh community in the country and the biggest Muslim community in the south-east, and where 80 languages are spoken. At the same time, it is home to more European corporate headquarters than Scotland, Wales and Northern Ireland combined.
The site of the world's first industrial estate, it has moved on from manufacturing and Slough Trading Estate, where the BBC comedy The Office was set, is undergoing a much-needed redevelopment to cater for the knowledge economy.
Reading, a market town 40 years ago, is entering the second stage of its urban renaissance. It is the capital of the Thames Valley, where Microsoft and Oracle have large campuses, large new developments have transformed the town centre into one of the top ten UK retail destinations, and its football team plays premiership football in a recently-built stadium.
The Thames Valley sees itself in competition as a business location not with other UK regions but other European destinations, such as Paris, Frankfurt or Amsterdam. It has done well by those comparisons in the past two decades. But it now faces challenges if it is to maintain its competitive edge.
There is some irony in the fact that it must grapple with shortcomings in two of the factors that have underpinned its success: transport infrastructure and skills.
A fifth of areas in Reading and a quarter in Slough are among the 10 per cent most deprived in the south-east. More than 10 per cent of the working age population of Slough have no qualifications at all.
And while its connections to London and overseas remain arguably its greatest asset, increasing road congestion, inadequate rail services and, most visibly, Heathrow Airport's capacity and access problems threaten to undermine its edge.
The travel factor cannot be underestimated as the workforce relies to a great extent on the road network. For example, 40,000 people commute into Slough to work, while 30,000 commute out every day.
The recent Terminal 5 debacle, which served just to exacerbate the complaints of "Heathrow hassle" among industry leaders, leaves Thames Valley businesses seething. "I shudder when anything happens to Heathrow or the M4," says Braithwaite.
Not a region that has historically taken a vociferous lobbying role, Thames Valley businesses and public sector bodies have been increasingly forthright, particularly on transport issues.
There is a widespread perception that the sub-region is used too much as a cash cow for the Treasury, with too little of its tax contribution being returned in the form of investment. This prosperous part of the south-east is not seen as an investment priority in Whitehall, many believe.
Ruth Bagley, chief executive of Slough Borough Council, says that of the £80 million Slough which collects in business rates, it gets back just £42 million as part of its grant. "Unless it continues to be supported, our economy will risk declining," she warns.
The potential "tipping point" for the Thames Valley - the moment at which the sub-region's advantages are eroded to such a point that skills and businesses depart - was identified in a 2006 report by Deloitte, the professional services firm. It highlighted potential contributing factors for a decline, including inadequate infrastructure, pressure from Heathrow, near full capacity in the labour market, skills shortages, declining productivity growth and high costs from pay levels and industrial rents.
Similar concerns were picked up this year in a "state of the sub-region report" produced by Berkshire's local councils. It pointed to poor direct links to Heathrow from the west, a lack of affordable accommodation for business and employees alike, and concerns that the much-vaunted Crossrail project could even reduce rail capacity into London as it will need dedicated tracks.
The authorities also warned that priorities for the sub-region were "at best, incoherent", with few links to government to lobby for political and resource support.
Of course, the lack of a coherent voice is exacerbated by the existence of the plethora of different councils in the sub-region with varying political priorities: there are six separate unitary authorities in Berkshire and another two outside in Basingstoke and Deane and Wycombe District. Bagley says: "The six unitaries in Berkshire have traditionally worked independently of each other on their economic agenda, and some have done very little."
However, she says that this is beginning to change, as the local authorities realise they need to understand their economies better and as government starts to devolve spending to local authorities rather than the regional development agencies.
There has also been good cross-party co-operation recently on the transport agenda, with strong support from Martin Salter, Reading's Labour MP, and Theresa May, the Conservative MP for Maidenhead.
One sign of that increased co-operation is the creation of a new economic strategy board for Berkshire, made up of representatives from all the local councils as well as private sector figures, which will work to form a unified economic plan.
The board had its first meeting this month.
Some are disturbed by the chatter of a tipping point, feeling such negative projection could damage the Thames Valley's image. But Ian Smith, senior partner at accountants PwC in Reading and a member of the new economic strategy board, insists it has been helpful to ensure that such a point is never reached. "We are getting nowhere near the tipping point," he says. "But we have made more noise on these issues and it's focused people's minds more."
Many agree that Heathrow expansion and a direct western link to the airport are critical priorities for the sub-region. And the increased noise has met with some success, notably Reading Borough Council's five-year lobbying effort to secure a £425 million upgrade for the town's rail station.
However, as Tim Smith, of Reading UK CIC, the economic development company, says of the push to secure funding for the station upgrade: "It shouldn't be that hard."
The concern that large international companies could easily leave the region is less of a worry as they have grown in the area, Smith believes. "The big change over the past five years is our global players are much more integrated with the local community and so we are much less vulnerable to being treated as a parking lot."
That is borne out by the decision of Vodafone, a home-grown multinational, to stay in Newbury when it built its new headquarters a few years ago. Billy Davidson, its group property manager, says the company considered moving but concluded the combination of labour availability, costs, access to London and quality of life was unbeatable.
He says: "A big part of the decision to stay was the labour force in the Thames Valley and that we have great employees located in and around Newbury. And in some respects it was an economic choice, too, because compared with London and Bristol further down the M4, it is a relatively cheap location.
"The nature of our sector means more people are choosing to work remotely and avoid the rush hour. And if you're talking about work-life balance, then the fact that 40 per cent of our guys live within 10 miles of the office is fantastic."
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