West Midlands industrial strategy can put region in driving seat
The government’s commitment to rebalance the UK economy provides a significant opportunity for the West Midlands, says Simon Dale.
The West Midlands region is at the vanguard of an advanced manufacturing and engineering revolution that is already providing new, skilled and well-paid jobs in sectors such as automotive production and aerospace. In Birmingham and Warwick, we host two Russell Group universities playing a leading role in industry-leading research, whilst Aston, Birmingham City, Coventry and Wolverhampton universities are directly supporting training and innovation in a host of key sectors such as construction, digital and creative and low carbon technologies.
Local industrial strategies
Last year’s industrial strategy white paper allows combined authorities to create their own local industrial strategies, with the West Midlands aiming to agree its own version by spring 2019. This will become the long-term economic strategy for the West Midlands, guiding policy on transport infrastructure, housing, skills and innovation. The aim is to develop a strategy that supports the region’s strengths, addresses its economic weaknesses, and aligns with UK-wide industrial priorities.
While there have been some clouds gathering over our automotive sector in recent months, the West Midlands’ sectoral strengths are significant. According to the manufacturing trade body, the EEF, the region accounted for more than 10% of all UK exports in 2016, the second highest of any region. Since 2010, the number of manufacturing jobs has increased by four times the national average. Data from the Centre for Cities shows the West Midlands Combined Authority area has seen a higher rate of business start-ups than the UK as a whole, registered more patents as a percentage of the population, and seen a higher than average increase in population in recent years.
However, despite its assets, our region faces significant challenges that will need to be addressed through the industrial strategy. The number of residents with degree-level qualifications is well below the national average, whilst the percentage without any formal qualifications is almost double the UK-wide figure. Public transport infrastructure is poor in many parts of the region, and the car is the predominant mode of commuting. As a result, productivity is being stifled, and too few graduates are staying in the region after university.
West Midlands mayor, Andy Street.
Key sectors
The temptation will be to try to appease every sector and all parts of the region through the industrial strategy. It is one that should be avoided. Instead, the strategy should provide a laser-like focus on the most achievable and rewarding opportunities for the West Midlands. Linking the West Midlands objectives into the ‘five foundations of productivity’ identified in the government’s industrial strategy white paper - ideas, people, infrastructure, business environment and place - will be crucial.
Advanced manufacturing appears an obvious place to start, given the region’s long-standing strengths in this area. In particular, our industrial strategy should identify key priorities for increasing research and innovation, working alongside local higher education providers. Improving technical education and the quality of apprenticeships is another important goal.
However, the West Midlands cannot afford to put all its eggs in the manufacturing basket. Birmingham has a high concentration of jobs, many well-paid, in the finance and insurance sectors. The West Midlands should aim to take advantage of its relatively affordable office space and land costs to attract firms from London and internationally. The region’s expanding youth population is also a major asset, and more could be done to encourage graduates and school leavers to start their own businesses, particularly in the digital and creative sectors.
Transforming cities - infrastructure
Improving transport infrastructure is a vital part of a West Midlands industrial strategy. Allowing people to travel more efficiently across the region, to other parts of the UK and internationally will help close the productivity gap and provide tangible quality of life benefits for local residents. The West Midlands has already received £250m to spend on local transport improvements through the Transforming Cities Fund, announced in last November’s budget. When HS2 arrives, it will provide more capacity and faster and more reliable train services from Birmingham and Solihull to London and eventually Manchester and Leeds, as well as huge opportunities for city centre regeneration.
In the immediate future, urgent work is needed to reduce congestion on the major and local road network, including looking at what can be done to reduce the charges on the M6 Toll Road. In the longer term, expanding the existing tram network and improving rail links are likely to be more economically transformative. Our industrial strategy should build on Andy Street’s existing transport infrastructure commitments, including redevelopment around the new Birmingham HS2 station, ensuring that these developments are aligned with local housing needs and those of local businesses.
Conclusion
The West Midlands has, alongside Greater Manchester, gained a head start on other regions by identifying the need for a strong, pro-growth industrial strategy which complements the government’s overarching plan to rebalance the economy.
Along with the key sectors identified above, Andy Street’s leadership will be crucial, as has already been demonstrated by the strong start the mayor has made in his first year in charge. The West Midlands has some incredible assets and untapped potential. As our industrial strategy is developed over the coming 12 months, let’s hope its execution matches our ambitions.
Simon Dale is director of the Midlands at Mace.