Summit Spotlight – How to achieve place-based growth in the Midlands

In a series of five Summit Spotlights, we’re distilling the expert perspectives of our panellists shared on the day to help continue the conversation and inspire even more collaboration.

On the panel

• Simon Marks – City Executive Midlands, Arcadis
• Jeegar Kakkad – Director Government Innovation, Tony Blair Institute
• Professor Nigel Driffield – Deputy Vice-Chancellor, University of Warwick
• Sandeep Shingadia – Director of Strategic Partnerships and Integration
• Professor Katie Normington – Vice-Chancellor, De Montfort University

On the agenda

The Midlands economy has the potential to be £18bn per year more productive, which would grow the regional economy by 8%. But how can this potential be unlocked? With the advent of new devolution deals bringing decision making closer to home, how can places across the Midlands coordinate and collaborate to drive inclusive growth and shared prosperity?

Identifying challenges

Understanding the scale of inequality
Giving some context for the conversation, Professor Nigel Driffield began by outlining that not many people in the UK know just how unequal the country is when compared to similar economies. For example, East and West Germany are more equal than the North and Midlands and London. He also shared that without London and the South East, the UK would be on a par with the 49th richest state in the United States. One cause of this inequality is the prioritisation since the mid-1970s of efficiency over innovation and collaboration.

A way of reducing this inequality is to make regions like the Midlands more productive – a seemingly considerable challenge given the Midlands’ productivity gap with the rest of the UK being as high as £86.3bn.  However, according to Professor Driffield this is partly because the Midlands is at a structural disadvantage due to the way productivity is measured in the UK.

Productivity is usually defined as GVA per hour worked, meaning that low-wage jobs and companies with smaller margins are classified as ‘low productivity’. This is despite such jobs and companies being crucial in supporting and enabling high productivity activity elsewhere in the economy. For instance, a carer (low-paid work) looking after an accountant’s children enables the accountant to continue their high-salary job – but would be unrecognised by current productivity measurements, despite the enabling role they play. This particularly impacts the Midlands because the region has a large number of people in low-paid work. It means that the economic impact of SMEs within the region is not recognised in regional productivity figures.

Sandeep Shingadia and Professor Katie Normington

Extending the independence of local UK economies
Another fundamental problem holding back place-based growth is the location of capital. Jeegar Kakkad commented that the UK is home to the second largest pensions market in the world, but none of the top 40 pension funds. The investment that goes into foreign-owned pension firms is usually then invested into those countries’ own domestic economies, compounding the problem and keeping that finance away from the UK economy.

Connecting people and places
Lack of transport connecting communities with new jobs was also citied as a barrier to regional economic growth. Sandeep Shingadia stressed that connectivity shouldn’t be made for transport’s sake – it needs to be made with people at its heart, provided at the right time to meet the needs of the community.

Making the most of the knowledge produced in the Midlands
The Summit also heard from the university sector on the role higher education institutions can play in driving place-based growth. Professor Normington discussed how Midlands universities are creators of new knowledge, but raised the question of graduate retention in the region and where that valuable knowledge gained in the Midlands is applied. Professor Normington also identified the need to better support SMEs to scale up – and not just in the cities, but across the entire region.

The panellists at Midlands Economic Summit 2024

Exploring opportunities

Leveraging Investment Zones to redress the balance
Investment Zones can boost productivity by joining up skills, innovation and supply chain development within particular sectors. They also foster cross-sector collaboration by giving economic influence to smaller firms across the supply chain. Just days after the Summit, the plan for the West Midlands Investment Zone was given the green light – with the potential to attract over £5 billion in private investment and create 30,000 new jobs.

Building on place-based expertise to modernise economies
AI and green fintech provide promising solutions to help address the productivity challenge. These emerging sectors are already transforming productivity in traditional sectors that drive local economies across the UK – from aerospace in Bristol, to Leeds focusing on AI and data and Newcastle becoming a clean energy hub. Jeegar Kakkad explained that the Midlands is uniquely positioned at the heart of both of these ‘twin transitions’ (AI and net zero) due to the region’s industrial and automotive heritage and energy assets, which position the region to lead the way in electric and autonomous vehicles, and clean and smart energy.

Holistic growth strategy for transport
Sandeep Shingadia explained how HS2 provides an opportunity to drive growth by connecting people and places. The West Midlands is working to maximise its potential as an inclusive growth opportunity and spread the benefits by investing in complementary local infrastructure projects such as new stations and Very Light Rail. The aim is to ensure that two million people across the region can access the HS2 interchange by public transport within 45 minutes.

Recognising how universities contribute across whole skills life cycle
Professor Normington explained how universities, working with breakfast clubs and after school clubs, are helping to raise levels of ambition in the Midlands starting from the age of 8. She explained how universities provide growth opportunities by delivering skills, including the higher technical skills most impacted by the skills shortage, and forming partnerships with businesses. This joined-up approach to delivering skills and job opportunities works by creating a talent pipeline and applied learning opportunities that benefit the region.

The Midlands Economic Summit is the Midlands’ largest pan-regional business forum. Convening over 500 business, academic and public-sector leaders, the Summit provides a unique space to celebrate the region’s strengths and discuss its strategic priorities.

This year’s summit, held on 10 June at the Vox Conference Centre Birmingham, explored the theme of ‘Driving Investment, Powering Growth’ through a diverse programme of expert speakers and panels.