5 minutes with Darren Hodson: A blueprint for growth in the West Midlands 

The fundamentals of growth

Achieving national growth is difficult, but stimulating growth within a specific region can be even more of a challenge. I have seen many people claim that regional growth must follow GDP, but I reject this notion. Having consistently out-performed Birmingham in recent years, Manchester is a strong example of how a region with a successful growth strategy can buck the national trend.

Regional growth requires the same components as growing a business. How exactly do business owners achieve growth? By investing in four core areas.

1. Product: They perfect their product or service through development;
2. People: They surround themselves with the right people (which links into the Mayor’s push on skill development) to ensure their business operates smoothly;
3. Sales and marketing: An essential investment for any growing business is typically sales and marketing;
4. Infrastructure: Finally, any business will make sure it has the right infrastructure to deliver its product or service.

In my view, a Regional Mayor should have an effective marketing strategy to boost the region’s reputation on both a national and international level. As the new focal point of the West Midlands, Richard Parker should be an advocate for the region to attract the inbound investment crucial for growth. Dedicating time to understanding the region’s strengths and unique offering for businesses should be a priority, as well as familiarising himself with the region’s key industries, such as our well-established automotive industry, the up-and-coming technology sector and the strength of our professional services market.

Strategies to secure investment

Funding will always be needed to increase productivity within the region and inspire companies to grow, especially SMEs. Owners of SMEs tend to be more cautious in seeking out third-party funding; while a poor debt funding package could cause financial difficulties in a large business, an error for SMEs could be terminal. Alternative funding methods, such as private equity, are sometimes viewed negatively due to a loss of control of ownership.

Government guarantees or funding support focused on the SME sector could unlock some of the cautiousness in the sector and drive growth and productivity. Securing this funding requires money and a mouthpiece to champion the West Midlands in conversations with government decision makers.

If the government’s budget is tied up in other initiatives for the foreseeable future, the Mayor should consider alternative avenues for funding, including private investment.

Growth tactics

Beyond funding, there are three initiatives that could foster growth within the region:

• Devolved powers – Granting the Mayor the power to make tax and budget decisions within the region would be highly beneficial. It would give him the flexibility to target growth efforts at specific sectors, which could attract the right businesses in perhaps key sectors to the region and create a competitive advantage over other regions.

• Deregulation – Reducing regulation in all areas of business would free up resource for owners, allowing more time and money to focus on growth. Time-consuming regulation processes are an issue our clients mention time and time again. While large businesses may have the resources to circumnavigate this regulation, SMEs rarely do and ultimately it prohibits growth for these smaller businesses.

• Government presence – Relocating more government departments from London to the West Midlands (which partially happened during the levelling up agenda) would put politicians at the heart of the area, allowing them to better understand the region and its needs. This could lead to investment in people and infrastructure, and create a stronger business hub. It would also send a clear message that businesses do not have to be London centric to be successful.

The legacy and future of automotive

The West Midlands, and Birmingham in particular, has a rich history in automotive. As one of the region’s most active dealmakers with more than 20 years’ experience in automotive, I have witnessed the industry rise and fall over the years. Approximately 10 years ago, automotive experienced a boom, which led to a wave of investment in Birmingham and the surrounding areas.

We have now entered a new era of automotive technology, which has seen the sector adapt and move towards electric vehicles (EV). Further investment in this field could align well with Labour’s commitment to invest in energy infrastructure and a potential push on the country’s net zero plans.

Technology and international investment

The technology sector in the West Midlands is growing but still developing. There are believed to be 144,000 people currently working in tech jobs across the region – combine this statistic with the industry’s £15.3bn impact on the local economy (‘West Midlands Digital Roadmap, 2024-2027’, 2023) and it becomes clear there is plenty of potential for growth.

Positioning the West Midlands as an ideal location for technology investment could form part of a strategy to increase the number of technology businesses in and around Birmingham. Highlighting the region’s unique connectivity, such as possessing the best 5G coverage (65% geographic coverage) of any area outside of London nationally and high levels of gigabit capable broadband (94% vs. the UK average of 79%), would be a positive place to start. Being more actively involved in the UK’s annual Tech Week and other initiatives that nurture technological innovation would also attract attention from the industry to the region.

The West Midlands has already forged strong links with technology businesses across Asia, specifically India. These international credentials are barely being publicised at present, but promoting the region’s global connections within the technology industry could lead to further foreign investment. We should be making the most of our existing relationships with these alternative markets.

Attracting professional services to the region

The West Midlands has become a significant hub for professional services in recent years, with considerable new entrants from the likes of Golden Sachs, Deutsche Bank and Rothschilds, alongside a number of new legal and accounting firms expanding into the region. Not unlike the progress the region has made in the technology sector, more promotional activity within professional services would encourage further investment.

A possible growth tactic for the professional services industry would be to encourage London-based companies to ‘outsource’ their work to other regions and hire people in the West Midlands. With the cost of living considerably lower in the Midlands, companies can reduce their salary expenditure without compromising on the quality of the services they provide or relinquishing the level of control that would be required if outsourcing overseas.

The Mayor could be a fundamental player in this strategy, by using his platform to tell London businesses that the West Midlands is worth their investment.

A promising future – with the right direction and driver

The West Midlands stands at a pivotal juncture. With its rich industrial heritage and a mix of established and burgeoning industries, the region has all the raw materials for significant growth, however a strategic plan is needed to realise this potential.

By investing in key sectors, fostering a business-friendly environment and prioritising marketing efforts, the West Midlands could develop an enviable reputation for business in the UK and the Mayor has a distinct opportunity to be the catalyst for this transformation.

The future of the West Midlands is promising, but it will require vision, determination and collaboration. Through working with business owners across the region, the Mayor has the chance to unlock the region’s full potential and create a thriving economy.