Businesses in the Midlands say better connectivity key to improving productivity

Businesses and regional bodies in the Midlands say improved connectivity will drive productivity growth across much of the UK and to help close the gap between the best and worst performing regions, according to a new study published by HS2 Ltd today.

Drawing on evidence from over 100 employers, local authorities and universities, HS2: Getting the best out of Britain, highlights the regional strengths of highly skilled manufacturing clusters, universities and research centres, and cutting edge technology entrepreneurs, but warns that more needs to be done to draw them together and realise their full potential in the modern economy.

 David Higgins, Chairman of HS2 Ltd said:

“This report is the evidence that HS2 will boost productivity in the North and Midlands. This is a once in a generation opportunity to join up and amplify the many centres of excellence around the country, as we prepare to exit the European Union.

“By improving the connectivity between our major population centres HS2 will give business access to the skills, labour and services they need to change the economic geography of the country.”

The report shows that world-leading skills and research in the Midlands and the North can match that of London and the South East. Cities and regions in the Midlands and North account for 32% of the UK’s research staff working in universities with high quality research, compared to 35% in London and the South East, and  high quality universities produce thousands of graduates every year.

The report, to be launched at an event in Nottingham later today, demonstrates that by joining up the major conurbations around the country, HS2 will enable a greater pooling of people and capital around the regions of the UK. This connectivity will enable businesses in the Midlands to gain better access to new markets, investments, and become more globally attractive.

Andy Street, West Midlands Mayor said:

“HS2 offers the biggest opportunity for our region in a generation. Of course, it puts us at the heart of a national high speed rail network which hugely boosts our connectivity. But there are so many other benefits. It provides us with the opportunity to transform our transport links within our region, to make the most of HS2. Our vision is that nobody in the West Midlands will be more than 40 minutes away from a HS2 station by public transport. An investment like this also gives us a huge opportunity to boost skills, support business and generate inward investment. It’s an opportunity we are determined to capitalise on.”

West Midlands productivity is at 85% of national average, with the aim of raising to the national average by 2030.  The report highlights a number of factors which contribute to this including the smaller scale of urban areas making it difficult for city regions in the Midlands to secure the same degree of scale and success as their counterparts in the South East. In addition, the Midlands needs to address skills shortages – in the city regions of the Midlands, less of the working age population have degree level qualifications (between 30% and 33% in 2015) compared to the national average (37%).

By offering HS2 faster, more frequent and more reliable travel between cities, HS2 will increase the number of skilled workers that businesses based in the Midlands can access – both directly on HS2 services, and by releasing capacity on the existing rail network for local commuter services. In addition, it will offer businesses the opportunity to relocate or expand their operations in the Midlands and realise significant cost savings while retaining easy access to opportunities in the capital. It will also help Birmingham build on its developing role as a financial, banking and professional services centre which has already attracted HSBC UK and Deutsche Bank to the city.

Chris Grayling MP, Secretary of State for Transport said:

“This study clearly shows transport investment is crucial to a strong and resilient economy. That’s why we are investing in all forms of transport including the biggest rail modernisation programme for over a century to improve services for passengers – providing faster and better trains with more seats.

“As Britain’s new railway, HS2 will deliver vital links between some of our country’s biggest cities, driving economic growth and productivity and helping to deliver the Government’s Industrial Strategy.

“By bringing our major cities, regions and communities closer together we are encouraging business and innovation and building a Britain that is fit for the future with a stronger economy and fairer society.”

Sir John Peace, Chairman of Midlands Engine and Midlands Connect:

“The Midlands economy is built on a strong advanced manufacturing base and is enhanced by a wide range of sectoral strengths, universities and research centres. Midlands Connect and Midlands Engine are seizing on the once in a generation opportunity HS2 brings to drive growth for the region, through improved connectivity within the region as well as beyond. We will create a thriving environment for businesses to flourish and HS2 is critical for us to do that. HS2 is arguably the greatest business opportunity to hit the Midlands in decades, benefitting both the East and West Midlands. And collectively we need to be HS2-ready.”

 Paul Faulkner, Chief Executive, Greater Birmingham Chambers of Commerce said:

“HS2 is a game changer for the Midlands. Not only will it put Birmingham at the heart of a new national network, it will bring regions closer together and open up new avenues for our local businesses to trade which each in other in skills and products; all of which will improve connectivity, boost productivity and help rebalance the national economy.”

The Midlands is home to nationally significant manufacturing clusters, including advanced manufacturing in the Black Country and Derbyshire, the automotive cluster around Coventry and Warwickshire, the ceramics industry in Stoke and Staffordshire and an aerospace and transport manufacturing cluster centred around Derby. The region also has a strong science and research base, including 20 universities, three of which have been ranked in the top 150 in the world – Warwick, Birmingham, and Nottingham. The Midlands aerospace cluster centred around Rolls-Royce, one of the world’s leading producers of aircraft engines, in Derby and around suppliers of aircraft control systems in Birmingham, Wolverhampton and Coventry.

HS2 will improve connections between businesses, universities and research centres and will connect these advanced manufacturers and centres of research excellence in the Midlands, providing opportunities for new collaborations across the UK. It will also connect these clusters in the Midlands to other aerospace clusters in Lancashire, Cheshire and Edinburgh. The West Midlands Combined Authority, working with its three partner LEPs, sees exploiting the region’s science and innovation excellence as vital to help raise productivity in the West Midlands.

Professor Simon Collinson, Deputy Pro-Vice-Chancellor for Regional Economic Engagement and Director of City-REDI (City Region Economic and Development Institute), University of Birmingham said:

“Improving connectivity across the UK is critical. It underpins the mobility of labour, as well as goods and services, to align the supply and demand for skills and talent between and within regions. HS2 is doubly important because it will also help to rebalance our national economy, reducing our dependence on London and the South-East and creating more dynamic growth in the Midlands region and beyond.”

 HS2 will serve around 30m people and directly serve 25 stations, joining up the dots between where we are now, and where we could get to as a country – a combination of more capacity and better connectivity will improve accessibility, and, therefore, productivity in the Midlands and the North – at the same time as easing the pressure on London.

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