Cities are crucial hubs in the Midlands, providing employment opportunities, higher wages and increased prosperity for their residents and those living in surrounding areas. As such, they have a vital role to play in tackling the region’s persistent productivity gap – the result of historic underinvestment and undervaluing of the Midlands – which costs the region £18 billion annually, a new Centre for Cities report highlights.
Centre for Cities says urban areas should be a key focus of Government efforts to help the Midlands reach its economic potential as part of the wider objective to level up struggling regions. It publishes its latest research in a new report, All Cylinders: The role of the Midlands Engine in the British economy, in collaboration with the Midlands Engine partnership.
The report identifies that if Birmingham, Nottingham and Leicester were enabled to play the same role that similar sized economies on the continent play within their local areas, the Midlands economy would be larger and more productive.
Centre for Cities estimates that the Birmingham urban area accounts for £11 billion of the £18 billion shortfall in economic output in the region. Urban areas across the Midlands account for 89 percent of the total output gap.
Centre for Cities identifies that focusing on Birmingham and Nottingham’s ability to attract service exporting companies into their city centres will be a key opportunity. At £70,000 per worker, the economic output of service exports in the Midlands is below the national average of £92,000 for the sector and tackling this shortfall will be of huge economic benefit to the region and the country.
Centre for Cities’ research suggests that Nottingham and the Birmingham area are missing out on some of the so-called “agglomeration effects” that make city centres advantageous places to do business, particularly for service exporting firms. Strategies are already being put in place to address public transport connections and road accessibility into the cities, and to improve available skills.
Centre for Cities highlights three key areas of economic policy to address to achieve the productivity potential of the Midlands:
- Improving skills of residents in large urban areas using skills money from the region’s allocation of the Shared Prosperity Fund, particularly targeted at residents with fewer than five good GCSEs.
- Making city centres more appealing places to do business with new, high-quality city centre office space that meets the needs of service exporting firms in particular.
- Improving public transport infrastructure and housing density particularly in areas with access to the two biggest cities, Birmingham and Nottingham.
Andrew Carter, Chief Executive of Centre for Cities, said: “If we are going to see a greater amount of access to prosperity available to people who live across the Midlands area, then addressing the performance of its cities is essential.
“Government should consider the role that cities play in the wider economy if it wants to realise the Midlands’ economic potential, grow the national economy and achieve its goal of Levelling Up struggling regions. These regions should take advantage of the offer of greater devolved powers, as the Government outlined in the Levelling Up White Paper last year.
“Urban economies in the Midlands were shaped by globally-competitive manufacturing industries and these are still a major part of the Midlands. Birmingham and Nottingham city centres now have a key role to play in offering the services sector access to knowledge and innovation. This includes ‘new economy’ businesses, like Fintech and advanced manufacturing – cutting edge parts of the economy that are increasingly important to the UK’s export base and present significant opportunities for economic growth in our cities.
“When we picture the Midlands firing on all cylinders, it’s a region with highly skilled, knowledge-intensive jobs in the city centre.”
