05What needs to change?

Addressing the underperformance of the Midlands Engine is not just important for the local economy, but for the success of the national economy. This is reflected in the Chancellor’s recent spring Budget, and the Government’s Levelling Up white paper that recognises the city regions need to be at “the centre of any plan to raise living standards” and to “benefit surrounding towns and communities.”¹⁴

To ensure the Midlands Engine can reach its economic potential, policy should look to maximise the benefits that cities and large towns, and in particular city centres, offer to service exporting companies. It should take advantage of the benefits that those places offer by:

1. Improving the skills of residents. The Midlands Engine has a higher share of residents without qualifications and a lower share of graduates compared to the UK as a whole. Policy in the area should focus on getting those who currently don’t have the equivalent of five good GCSEs up to this level by targeting skills money from the area’s allocation in the Shared Prosperity Fund towards supporting these people.
2. Making city centres more attractive places to do business. Midlands Engine city centres have below average shares of office space. New, high-quality city centre office space that meets the needs of occupiers, in particular service exporters, should remain a priority even in a world of hybrid working. Policy should focus on helping to bring forward appropriate office space in these centres through planning policy and the use of central government funds designated for this purpose. For example, placing the region’s investment zones, which were announced in the Spring Budget 2023, in Birmingham, Nottingham and Leicester city centres would be one way to do this.
3. Improving public transport infrastructure and density within the big cities. The Birmingham and Nottingham conurbations have the poorest transport accessibility in the region, shrinking their labour market and damaging their economic performance. Policy makers should look to align brownfield regeneration funds that are available from central government together with the current City Region Sustainable Transport Settlement for Birmingham (and any future settlement for Nottingham to develop transport and housing) in tandem, increasing the number of people who live around public transport stops.

It should also continue to support a competitive manufacturing sector, which is more likely to be found in the suburbs of or hinterlands around cities. The Midlands Engine manufacturing sector is currently performing close to the average for Great Britain. Policy makers should set out how to meet future manufacturing demand by ensuring suitable sites, in particular greenfield sites, with access to large pools of workers are available in the suburbs and urban hinterlands, where the manufacturing sector has enjoyed the benefits offered by the Midlands Engine so far.

Finally, national and local policymakers should look to better match economic policy with the geography it operates over by striking devolution deals that together cover the whole of the Midlands Engine by 2030. The West Midlands Combined Authority area has already benefited from the greater control it has had over policy, and this will likely increase with its recently-announced trailblazer deal. The East Midlands is also looking to benefit with the proposed deal now waiting for approval. The parts of the Midlands Engine without one should begin working on their own devolution deal with Government to take advantage of the Government’s intention to give all parts of England a deal by 2030.